The collapse in oil and gas prices has put about $25-billion deals in the industry in the balance, posing a threat to the finances of companies already bruised by the crash. This threat is more pronounced for companies that are relying on asset sales such as Occidental, BP, and ExxonMobil. These companies announced some divestment plans last year, but with oil prices hovering near $30/barrel, those deals now look less attractive.
Occidental may have suffered the hardest blow from the current crash. The company needs to dispose of some assets to finance its acquisition of Anadarko last year. Occidental's main divestment plans are the $8.8 billion sales of Anadarko's African assets to Total SA. However, Total SA can walk away from the sale of assets in Ghana and Algeria worth almost $5 billion that has not been signed yet. Occidental also intends to divest land in Wyoming to state authorities, but the current pandemic may hinder the state's efforts to seal the deal.
BP, in February, said it would increase the divestment plans from $10 billion to $15 billion by mid-2021. By the end of 2019, it had agreed more than $9 billion of deals, including a $5.6 billion sale of Alaskan assets to Hilcorp Energy Co, but this transaction is yet to be finalized. Last week BP said that due to the current market conditions, deal completions might need to be revised.
ExxonMobil has already borrowed cash to pay dividends. The company is also relying on asset sales to reinforce its financial position. It aims at raising $10 billion by the end of 2021 through divestment of assets in the Gulf of Mexico, Azerbaijan, and Malaysia. However, Exxon's VP Neil Chapman, during the company's analyst day in March, sought to temper expectations for successful divestment.
