ExxonMobil (XOM -0.88%) announced today that it has agreed to sell most of its non-operated upstream oil and gas assets in the U.K.'s central and northern North Sea to NEO Energy. The oil giant will receive more than $1 billion for the properties upon closing, which should occur by the middle of this year. On top of that, it could receive up to $300 million of additional contingent payments based on higher commodity prices.

The sale includes stakes in 14 producing oil fields in the North Sea and interests in the associated infrastructure. Shell (RDS.A) (RDS.B) operates most of these properties, while Total (TTE 0.58%) is the operator of one field. Exxon's share of the production from these fields averaged about 38,000 barrels of oil equivalent per day in 2019. 

An offshore oil production platform at sunset.

Image source: Getty Images.

Exxon will retain its non-operated share in upstream assets in the southern North Sea and its stake in the Shell Esso gas and liquids infrastructure that supplies ethane to the company's Fife ethylene plant.

The sales are part of Exxon's continued plan to high-grade its portfolio by selling less-strategic assets. That will allow the oil company to prioritize investments on higher-return opportunities, including offshore Guyana, the U.S. Permian Basin, Brazil, and LNG. Those investments are crucial to its long-term strategy of growing its earnings and cash flow so that it can fund additional capital investments, reduce its debt, and maintain its dividend.

Exxon's fossil-fuel-focused investment strategy differs from those of European rivals like Shell and Total. While Exxon is ramping up its low-carbon investments, it's not investing anywhere near as much capital as its peers in lower-carbon opportunities. Because of that, it risks falling behind as the energy transition accelerates.