Exxon: New Drilling in North Sea

ExxonMobil Corp. (XOM - Analyst Report) will start drilling at the Beryl field in the northern North Sea. The field is jointly owned by Mobil North Sea LLC (Exxon’s subsidiary and the operator) -- 50%, Hess Limited (HES - Analyst Report) -- 22.22%, Enterprise Oil Limited (a subsidiary of Royal Dutch Shell [RDS.A - Analyst Report]) -- 22.78% and OMV (U.K.) Limited -- 5%.

The Beryl field is located in the UK sector of the northern North Sea, approximately 335 kilometers north-east of Aberdeen, at a depth of 117.5 meters. This field achieved a total cumulative production of 1 billion barrels of oil and condensate in 2009, 33 years after production commenced.

Management said that the additional production from the new wells is expected to help offset the decline from existing production wells. The decision to commence fresh drilling has been taken after exhaustive geological, reservoir and drilling studies.

The initial drilling program involves three wells drilled from the Beryl Alpha platform and a capital investment of approximately $200 million. The Beryl Alpha platform is a fixed gravity-based concrete structure comprising the main production platform, a bridge-linked riser access tower and a flare tower.

The investment in this field reflects Exxon’s confidence in and support from the co-owners. ExxonMobil continues to be an industry leader in bringing new energy supplies to the market. Its significant investment for the Bass Strait, Kipper-Tuna and the Turrum projects are some of the latest examples.

ExxonMobil has very large and established exploration and production operations in all the major hydrocarbon producing regions of the world. The company’s leading position in the oil industry reflects the size and diversity of its asset base, both in terms of business mix as well as geographical footprint. Our long-term recommendation for ExxonMobil shares is Neutral, which means that the stock will perform in line with the broader market.

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