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Savannah Energy in talks to buy Exxon's Chad, Cameroon stakes

EconomyJun 02, 2021 11:01AM ET
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© Reuters. FILE PHOTO: An Exxon sign is seen at a gas station in the Chicago suburb of Norridge, Illinois, U.S., October 27, 2016. REUTERS/Jim Young/File Photo

(Reuters) -Africa-focused Savannah Energy and Exxon Mobil Corp (NYSE:XOM) are in exclusive talks over the sale of Exxon's interest in energy assets in Chad and Cameroon, the companies said on Wednesday.

The British oil and gas producer is proposing to buy a 40% operated interest in the Doba oil project in Chad, and a 40% interest in the Chad-Cameroon oil transportation pipeline.

The company's London-listed shares were last up nearly 7% at 19.25 pence.

An Exxon representative confirmed the two parties have entered exclusive negotiations and said there was a possibility that the talks may conclude without an agreement.

"We continue to high-grade our portfolio by divesting non-core assets that no longer compete for capital within our industry-leading portfolio of opportunities," Exxon said in an emailed statement.

The energy sector is seeing a wave of merger and acquisition activity as companies cut back their oil and gas portfolios to keep only the assets most likely to be profitable and redeploy capital for a transition to clean energy as uncertainty mounts over future demand for fossil fuel.

Savannah Energy, which only operates in Nigeria and Niger, did not disclose the financial terms being discussed.

Savannah Energy on Wednesday asked for trading in its shares to be suspended until it publishes details of the proposed deal or confirms that the talks have ended.

The Doba oil project produced gross 33,700 barrels of oil per day (bopd) on average, while the Chad-Cameroon pipeline transported gross 129,200 bopd last year, the British company said.

Savannah Energy in talks to buy Exxon's Chad, Cameroon stakes
 

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