Drillers dumping older assets in Gulf

With crude oil prices high, the major companies are focusing on bigger and more profitable areas

Big Oil is giving up looking for singles and doubles in the Gulf of Mexico: Now it’s home runs or bust.

Exxon Mobil Corp. and Royal Dutch Shell PLC, the world’s two biggest oil companies, have put a slew of assets in the Gulf up for sale in recent weeks, while Brazil’s state-run Petrobras last week sold the bulk of its production in the region to midcap explorer Murphy Oil Corp.

The majors are not leaving the Gulf altogether, but they are shifting priorities. They’re using oil’s climb to a four-year high above $86 a barrel to offload older assets that are past their peaks to focus on bigger, more profitable discoveries, either in the deepest reaches of the Gulf or unexplored seas elsewhere in the world. The message is clear: Go big or go home.

“When oil was in the doldrums, companies were much happier to sit on assets that performed as expected,” said Oma Wilkie, a senior analyst at RS Energy Group. “But with Brent pushing $80, they can hopefully get top dollar for assets that are OK but not the best in the portfolio.”

The sales come at a time when production from the Gulf has reached record levels — 1.85 million barrels a day — but has been dwarfed by the growth of onshore shale. The region now makes up just 17 percent of U.S. total production, down from 27 percent a decade ago.

For Exxon, cash is in high demand. The world’s biggest oil explorer by market value is ramping up spending on offshore plays such as Guyana and Brazil in a bid to revamp its struggling upstream division, where production has stagnated and returns lag those of peers.