Sources say ConocoPhillips is exploring the sale of Permian Shale assets worth more than $1 billion.

ConocoPhillips has been looking at selling some of its Permian basin shale assets worth more than $1billion, after two unsuccessful years of trying to sell the same assets.

Houston-based oil producer, Texas, is preparing to complete its $22.5 billion acquisition of Marathon Oil before the end of the year. As part of the deal it will assume approximately $5.4 billion in debt from Marathon Oil and plans to raise an additional $2 billion by selling assets.

Sources said that ConocoPhillips had hired investment bankers from RBC Capital Markets in order to manage a sale of the Permian assets. In recent weeks, they invited bids for smaller oil producers and public companies.

Sources said that ConocoPhillips tried to sell these Permian operations in 2022 but was unable to reach an agreement with potential buyers.

Sources said that the production from the assets which cover 55,000 acres net in Delaware's Permian basin is expected to reach 17,000 barrels equivalent per day at the end of this year. Core earnings are estimated to exceed $220 million by 2025. The sources warned that a deal was not guaranteed.

ConocoPhillips refused to comment. RBC declined to comment.

In the last two years, the U.S. shale sector has seen a record-breaking dealmaking wave as energy companies rushed to increase their oil and gas drilling inventory, particularly in the Permian basin. Exxon Mobil acquired Pioneer Natural Resources for $60 billion and Chevron proposed a $53 billion purchase of oil producer Hess.

In the wake of these acquisitions, the biggest buyers are looking to sell non-core assets to streamline operations, reduce debt and increase shareholder returns.

These assets will likely attract smaller producers who are looking to make deals to increase their scale and better compete against larger competitors. (Reporting from Shariq Khan in New York and David French; editing by David Gregorio).

(source: Reuters)