Exxon Mobil Corporation (NYSE:XOM) reached an agreement to sell its majority stake in a Hong Kong-based joint venture for $3.4 billion, in the latest among a series of similar deals by American oil companies to channel funds back home.
The Irving, Texas, company will divest its 60 percent interest in Castle Peak Power Company Limited, or Capco, a joint venture between CLP Power Hong Kong Limited and Exxon. CLP Holdings Limited (HKG:0002), the holding company of CLP Power, will acquire 30 percent of Exxon’s stake, bringing its total interest in Castle Peak to 70 percent, while state-owned China Southern Power Grid will buy the other 30 percent.
Under a separate agreement, CLP said it will also purchase Exxon’s 51 percent stake in Hong Kong Pumped Storage Development Company Limited, for $256 million. CLP said it will use internal funds and a $1.3 billion loan to finance the transactions. The acquisition is expected to be completed by mid-2014.
“The transactions give CLP majority control over our generation assets and enable us to better coordinate our generation business with the transmission and distribution operations,” CLP said in a statement.
Some of the divestment sales by U.S. oil companies in recent months have been triggered by demands from shareholders for better returns, prompting companies to slash spending on energy projects overseas.
Exxon has invested $33 billion in the first nine months of 2013 in its energy projects and has been trying to generate returns for investors though the sale of assets, share buybacks or dividends, according to Reuters.
Exxon had earlier held an auction to find a buyer for its stake in Capco, but CLP was given preference because it already had a minority interest in the venture.
Gayathri writes about geopolitics and business for International Business Times. She began her career at the Times of India as news coordinator, before moving on to IBTimes...