Equinor plans to sell Eagle Ford holdings
The Norwegian energy major Equinor said it will sell its holdings in South Texas’ Eagle Ford shale at a steep discount to the Spanish oil and gas firm Repsol in order to instead focus on offshore oil and wind projects.
Equinor, previously named Statoil, paid more than $800 million to establish its Eagle Ford position in 2010 in the earlier days of the shale oil boom. It sold to Repsol for $325 million.
The discounted sale price comes as growth in the U.S. shale plays — particularly in more mature oil and gas fields such as the
Eagle Ford — slows amid muted oil prices. Many companies are struggling to generate strong enough returns to justify their investments in shale wells.
The deal between the two European energy players allows Equinor to move out of the Eagle Ford by selling its 63 percent stake in its existing joint venture with Madrid-based Repsol. The Spanish company will become a bigger Eagle Ford player and take control of the venture and its 69,000 net acres.
Repsol inherited its position in the joint venture when it acquired the Canadian company Talisman Energy in 2015.
“This transaction supports Equinor’s strategy to optimize our onshore U.S. portfolio, enhancing our financial flexibility and focusing our capital on our core activities in the country,”
said Torgrim Reitan, an executive vice president at Equinor.
Those core U.S. activities include Equinor’s production in the Gulf of Mexico and its newer efforts to develop offshore wind projects off the Atlantic coast, including the planned Empire Wind project off New
York.
In recent years, Equinor has leaned on its offshore oil and gas expertise to develop a leading position in offshore wind. In Europe, Equinor has even developed wind projects to power its offshore oil and gas operations.
Equinor’s greater emphasis
on renewable energy projects led the company to change its name from Statoil.
This isn’t the first time an international player has tried its hand at U.S. shale and decided to move on. Last year, Australian mining giant BHP sold its Texas shale acreage for $10.5 billion
to BP in the biggest energy deal of 2018.
Equinor isn’t completely abandoning U.S. shale. The company is exploring the potential of the Austin Chalk play in Louisiana. It has a stake in Marathon Oil’s Louisiana exploration.
Repsol also has a shale presence in Pennsylvania’s
Marcellus shale.
In a separate deal, Repsol will acquire a 20 percent stake in Equinor’s Monument prospect in the Gulf. Exploration drilling is expected to begin by the end of this year.