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Oil refining

SK Innovation divests of stakes in US shale oil fields

By Mar 08, 2021 (Gmt+09:00)

(Source: Getty Images Bank)
(Source: Getty Images Bank)

SK Innovation Co. has sold its entire ownership in its US shale oil fields and their relevant facilities, in line with its parent group's efforts to scale back on oil and chemical operations to focus instead on electric vehicle batteries and other eco-friendly businesses. 

The South Korean refinery and EV battery maker agreed with Texas-based BenchMark Energy Corp. in January of this year to sell the US assets for an undisclosed sum, SK said on Mar. 7. They are set to complete the transaction this month, which industry watchers estimate at several hundreds of million dollars. 

The SK Group's arm acquired the US oil fields located in Oklahoma and Texas between 2014 and 2018 to secure crude oil at lower prices. In 2014, the company purchased stakes in oil fields in Crane County, Texas, as well as in Grant and Garfield Counties in Oklahoma. In 2018, it acquired the entire stake in US shale oil developer Longfellow Nemaha, including an interest in two of its shale oil assets in Garfield.

Since the beginning of the year, SK Group has been stepping up efforts to raise fresh funding for new growth areas through initial public offerings and stake sales.

The divestment came just before its holding company SK Holdings Co. offloaded an 11% stake in SK Biopharmaceuticals Co. in a block trade for 1.1 trillion won ($1 billion).

Now the energy-to-telecom-focused conglomerate plans to sell up to a 49% stake in its petrochemical arm, SK Global Chemical Co. The country's largest city gas supplier SK E&S Co. is seeking to offload shares in its subsidiaries.

In January, SK Innovation announced a plan to build its third electric vehicle battery plant in Hungary for $2.29 billion, in addition to the two EV battery plants under construction in the US state of Georgia.

But it may suffer a setback in its global expansion after the US International Trade Commission (ITC) in February ruled in favor of LG Energy Solution Co. over a trade secret infringement dispute on EV batteries. SK Innovation refuted the ruling and remains steadfast that it has no intention to reach a settlement with its local rival.

A group of US politicians, including Georgia Governor Brian Kemp and a senator from the state called on the US Department of Transportation for a review of the ruling's impact on the US government’s green transportation goals. But last week, the ITC stated that its verdict, prohibiting SK Innovation from importing battery products to the US for 10 years, is not excessive

Last year, SK Innovation turned to an operating loss of 2.6 trillion won, compared with 1.1 trillion won in operating profit a year earlier. Sales declined by 31%, dented by weak demand for petroleum and chemical products, coupled with worsening refining margins.

Write to Jae-Kwang Ahn at

Yeonhee Kim edited this article.

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