The fields BHP and XOM were selling are on their legs production wise. Similar practices have been going on for at least 10 to 15 years in the North Sea where majors sell still producing, but well into decline, to smaller operators that have a different ROI profile and who are willing to take up the platform decommissioning expense, which usually includes plugging and abandoning the wells, removing the platform and asocaited pipelines.
XOM and BHP could not get a buyer who was willing to pay what they wanted for these old assets. Pretty simple really.
To be honest its probably cheaper to keep them operating at the low rates they currently are and not making much money (and probably making accruals to decommission in the future) vs spending the AUD500m to AUD750m to fully decommission the fields and platforms.
Personally, I would hardly describe current oil prices as "high". They are probably about mid range to be honest. "High" would probably be in the USD90 and up (Brent) range and holding there for at least a quarter, probably longer.
My 2 cents, YMMV, etc etc
LKO Price at posting:
0.3¢ Sentiment: Hold Disclosure: Held
(20min delay)
