China’s Sinochem is reportedly planning to divest its 40% stake in US shale JV Wolfcamp, reported Reuters, citing sources.
The potential sale could be valued upwards of $2bn (14.22bn yuan).
The Chinese state-backed oil and chemicals company has engaged Barclays to advise on the potential sale of its interest in the JV with ExxonMobil, according to sources familiar with the matter.
The sale discussions are in preliminary stages, and there is no certainty of a deal with Exxon, which has the right of first refusal, or any other parties.
These could include rival Asian national oil corporations.
It is also possible that Sinochem may choose to retain its stake.
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By GlobalDataNeither Sinochem nor Barclays provided comment and Exxon declined to comment on the matter, reported the news agency.
If the sale proceeds, it would mark the end of Sinochem’s more than a decade-long involvement in the Permian Basin in Texas.
Sinochem acquired the stake from Pioneer Resources in 2013 for $1.7bn, with production from the JV’s land at around 10,000 barrels of oil equivalent per day (boepd) at the time.
The most recent figures show output has risen to more than 44,000boepd.
Exxon’s acquisition of Pioneer in May for $60bn made it the top producer in the Permian Basin.
Meanwhile, Sinochem has been pivoting away from its oil exploration and production business to focus on new materials and life sciences, as stated by its former chairman, Frank Ning, in 2017.
The Wolfcamp JV represents Sinochem’s most significant oil and gas-producing asset outside China.
The company has also been attempting to sell its 40% stake in Brazil’s Peregrino oilfield since 2017.
Following a state-mandated merger with ChemChina in 2021, Sinochem faced additional challenges, including the closure of several oil refineries in eastern China earlier this year due to sluggish fuel demand.
Separately, Exxon is considering the sale of a package of conventional oil assets in the Permian Basin, potentially valued at approximately $1bn, aligning with its strategy to concentrate on expanding shale production.
