Exxon Mobil Corporation XOM, the U.S.-based oil and gas giant, has entered into an agreement to sell its older assets located in the Permian Basin of Texas and New Mexico. The company has not disclosed the buyer of the assets or the deal’s valuation. However, according to sources, the assets have been sold to a privately held energy company, Hilcorp Energy, for approximately $1 billion.

XOM Sells Permian Basin Assets to Hilcorp Energy

Per Reuters, ExxonMobil had previously auctioned these assets to shift its focus on shale drilling properties which offer higher growth and better returns. Hilcorp Energy emerged as the winner of the auction, buying these assets for approximately $1 billion. ExxonMobil stated that the transaction will likely be closed in the March quarter of 2025.

XOM's divestment involves conventional oil drilling assets in the Permian Basin. The company mentioned that these assets include conventional vertical wells, not horizontal ones. Vertical wells are typically less advanced than horizontal wells used in shale production.

XOM Maintains Focus on High-Growth Shale Properties

The company stated that the divestment aligns with its strategy to focus on investments that improve its portfolio by adding advantaged assets. ExxonMobil also mentioned that it has been continuously optimizing its portfolio to focus on its most profitable assets. The company follows a strategy of divesting its non-core assets and using the proceeds to strengthen its balance sheet.

Hilcorp Energy Expands Portfolio

The company specializes in buying older, mature assets from rival companies in the industry and is one of the most active buyers of such assets. Previously, the private firm acquired Eni’s assets offshore Alaska in a deal worth $1 billion. The U.S. oil and gas sector has recently witnessed a consolidation trend within the industry. Taking advantage of the favorable commodity price environment, many oil and gas majors have pursued large mergers, such as the $60 billion acquisition of Pioneer Natural Resources by ExxonMobil and the pending $53 billion all-stock merger between Hess and Chevron Corporation.

XOM’s Zacks Rank and Key Picks

Currently, XOM carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the energy sector are Archrock Inc. AROC, Smart Sand, Inc. SND and FuelCell Energy FCEL. Archrock presently sports a Zacks Rank #1 (Strong Buy), while Smart Sand and FuelCell Energy carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.