EXXON Mobil has agreed to sell its 60 per cent stake in a Hong Kong utility and a power storage firm for a combined $3.4bn (£2.1bn), helping the US oil major raise funds to plough back into its core operations.
Many integrated global oil companies have struggled to boost production, spending heavily on new projects in recent years. In the first nine months of this year, Exxon, the world’s biggest oil firm by market value, spent $33bn.
They are also keen to put cash in the pockets of investors through asset sales, share buybacks or dividends as analysts grumble about lagging stock prices.
Under the deal, CLP Holdings will assume control of Castle Peak, one of Hong Kong’s two electricity providers, lifting its stake to 70 per cent by buying half of Exxon’s holding for HK$12bn.
The sale of the stake came from two years of “bilateral discussion” with the US oil major instead of an auction.
CLP also plans to buy Exxon’s 51 per cent stake in Hong Kong Pumped Storage Development for HK$2bn.
CLP, which is backed by the wealthy Kadoorie family and has been providing electricity to Hong Kong for over 100 years, said the deal will help it better manage and coordinate its Hong Kong power generation and distribution business.
State-owned China Southern Power Grid (CSG) will buy the other 30 per cent held by Exxon, making it its first offshore investment.
City A.M. Reporter