Weekly Oil & Gas Notes: Exxon Mobil, Chevron & BP

The past week saw quite a few developments among the three oil & gas giants Exxon Mobil (NYSE:XOM), BP Plc (NYSE:BP) and Chevron (NYSE:CVX). Exxon Mobil expanded its shale oil operations in the United States through the purchase of high quality acreage in the Bakken, and sold one of its refineries in Argentina. BP’s stake in successful Russian joint venture TNK-BP may be subject to a bidding war after its partners expressed an interest in buying out BP’s 50% share. Meanwhile, Chevron continues its attempts to resume operations in Brazil and recently paid a $17 million to the country’s petroleum regulator in penalties related to the spill.

Exxon Mobil’s Acquisitions & Divestitures

Exxon Mobil (NYSE:XOM) recently agreed to buy Denbury Onshore’s assets in the Bakken Shale for $1.6 billion in cash and operating interests in two of its fields. The deal will expand Exxon Mobil’s acreage in the Bakken by over 50% and is expected to increase its production in the region by over 15,000 oil equivalent barrels per day during the second half of 2012. (See Exxon Mobil Expands Operations In Bakken With $1.6 Billion Deal)

The Bakken shale formation, located between the U.S. states of North Dakota and Montana, has recently emerged as one of the most sought-after energy plays in the country. Exxon Mobil has acquired drilling rights for over 196,000 acres in the region, a large part of which undeveloped, and will make significant capital expenditures to gain access to the vast reserves of shale oil.

In other news, the company recently sold off its Campana refinery in Argentina and a number of its filling stations in South America to oil company Bridas. According to newspaper reports, the deal is estimated to be worth around $600 million.

BP Plc’s TNK-BP Stake

AAR, the group which represents the consortium of Russian Billionaire partners in TNK-BP, is seeking to purchase U.K oil giant BP Plc’s (NYSE:BP) half of the stake. This could spark a bidding war with Russian oil giant Rosneft, which has also expressed an interest in purchasing the stake.

Reports last week suggested that Rosneft, which is backed by Russian Premier Vladimir Putin, is willing to pay $18-23 billion for BP’s 50% stake in a structured deal involving upto $15 billion in cash and a 12.5% stake in Rosneft. AAR had previously made an offer of $10 billion, but will probably increase its offer to match Rosneft’s bid. Analysts value the stake at $25 billion. (See BP In Negotiations With Rosneft Over The Sale Of Its Stake In TNK-BP)

TNK-BP has generated over $19 billion in dividend income for BP since its initiation in 2003. However, BP is looking to sell its stake in the venture, primarily due to tensions between the company and AAR, and also because it is looking to free up over $38 billion to settle expenses related to the 2010 Deepwater Horizon oil spill.

Chevron’s Troubles in Brazil

Chevron Corp. (NYSE:CVX) has paid 35.1 million real ($17.3 million) to Brazil’s National Petroleum Agency (ANP) in penalties related to two oil spills in the Frade Field off the coast of Brazil. In spite of receiving a 30% discount on the fine for prompt payment and cooperation (which will reduce the fine to around $12 million), its total penalties related to the Brazil oil spills now stand at over $50 million.

A bigger concern, however, is the impending civil lawsuit on Chevron and Frade drilling contractor Transocean. A Brazilian federal prosecutor is seeking around $22 billion from the companies in relation to the oil spills, and their operations in the country have been banned until further notice.

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