Responsible Exit Principles for Oil and Gas Companies

Asset transfers in the oil and gas industry are not new. Yet, as the energy transition accelerates, there is a growing risk that oil and gas companies sell assets in response to pressures to decarbonize. However, transferring assets to operators with lower standards can lead to higher emissions and increased risks. This briefing offers a framework to guide these transactions and ensure that environmental and operational integrity is upheld.

Designed for use by a range of stakeholders, these principles set out best practices to help companies manage financial, legal, environmental and reputational risks during asset transfers. They were developed with input from representatives of the oil and gas industry; investors, the financial, legal and accounting professions; the insurance industry; standard-setting bodies; academia; and civil society. All stakeholders can adopt and refine these standards to support a responsible, low-emissions future and harmonize regulatory practices across the industry.

These principles are relevant to:

• Buyers and sellers (public/state-owned/private) of upstream oil and gas assets to manage financial, environmental, legal and reputational risks.
• Financial institutions who can refer to these principles when determining whether and under what conditions to lend to, invest in, underwrite, advise or insure a company in the oil and gas sector
• Professional advisors (legal counsel, who can refer to these principles when drawing up contracts of sale; external auditors, who can assess the quality of optional disclosures in the notes to the financial statements and narrative disclosure; and consultants, who can weigh up the implications of these principles when advising on strategic priorities, including using M&A as a tool to accelerate business model transformation)
• Governments and financial regulators, who can use these principles to consider how best to regulate both decommissioning activities and asset transfers within their jurisdictions, including the impact such transfers may have on nationally determined contributions (NDCs), and the implications for fiscal policy.
• Host communities, civil society and other accountability actors who can monitor the terms and implementation of asset transfers to hold sellers and buyers accountable for their compliance (or non-compliance) with these principles, including as part of broader just transition considerations.