European and global oil companies are among those expressing early interest in acquiring a majority position in the Shenandoah offshore project in the U.S. Gulf of Mexico, according to multiple people familiar with the process.
The parties named by sources as considering bids include TotalEnergies and Shell. London-listed BP and Spain's Repsol were also identified by several sources as interested, and Chevron is expected to evaluate a potential offer, the people said. The parties spoke anonymously because the discussions are private.
Two co-owners of the Shenandoah field recently initiated a formal sale process for their stakes, offering potential buyers the opportunity to acquire 51% of the project, three sources said. The sellers are Beacon Offshore Energy, which is backed by Blackstone and is the operator of Shenandoah, and HEQ Deepwater, which is owned by Quantum Capital Group and Houston Energy. Israel's Navitas Petroleum holds the remaining interest in the asset.
Initial bids are anticipated in the coming weeks, the sources added. Observers also expect the process could draw interest beyond the named international oil companies, with larger producers from the Middle East and Asia identified as possible entrants into the bidding, according to another person with knowledge of the marketing effort.
Those familiar with the process cautioned that not every party cited may submit an offer. The ultimate valuation for any sale will hinge on several factors explicitly noted by the sources: how large a portion of Shenandoah is sold and the trajectory of oil prices. These factors will influence the price potential buyers are willing to pay, the people said.
Requests for comment were declined by several companies. TotalEnergies, Repsol, BP, Beacon, Quantum, Blackstone and Shell declined to comment, and a representative for HEQ Deepwater also declined to comment. A Chevron spokesperson provided a prepared statement saying "Chevron regularly evaluates its business opportunities and portfolio. We do not disclose our business development strategies."
Technical profile and production
Shenandoah is classified as an ultra deepwater field, with hydrocarbons located in reservoirs at approximately 30,000 feet below the seabed. Industry sources referenced in the process note that exploration and development at such depths present significant technical challenges - reservoirs at that level face pressures of about 20,000 pounds per square inch - but also that these settings are considered among the more prospective plays in the U.S. Gulf region.
The field began producing in July. Beacon reported in October that four phase-one wells were delivering the targeted aggregate output of 100,000 barrels of oil per day, a production milestone cited by the sellers and prospective buyers as relevant to asset valuation.
Market context
One source involved in the marketing process said that interest in U.S. oil and gas assets has strengthened amid the conflict in the Middle East. That source noted two dynamics supporting the asset class: higher oil prices and the geographic separation of Gulf of Mexico production from the active conflict zone, factors the source said increase the assets' appeal because production can be supplied to global markets.
The sale process is ongoing and subject to change as bids are submitted and evaluated in the weeks ahead.