UPDATE 1-Exxon, Shell advance in Newfield's Asia auction-sources
* Second-round bids due in mid-September
* Newfield is Malaysia's fourth-biggest oil producer
* All shortlisted parties on good terms with Petronas
* Newfield unloading older assets to invest closer to home
By Denny Thomas and Niluksi Koswanage
HONG KONG/KUALA LUMPUR, Aug 15 (Reuters) - Energy majors Exxon Mobil Corp and Royal Dutch Shell are among the suitors advancing to the next round of bidding for Newfield Exploration Co's Malaysian and Chinese oil and gas fields valued at about $1.2 billion, people familiar with the matter said.
Newfield and Hess Corp are among a number of U.S. energy companies unloading ageing and less productive oil and gas fields to invest in more strategic and profitable projects, particularly in and close to their home markets. The moves are driven in part by activist shareholders.
Nearly a dozen suitors were attracted to Newfield's auction that kicked off about two months ago. Newfield's advisor, Goldman Sachs, has whittled down to the list to at least four, inviting Canada's Talisman Energy Inc and KUFPEC, a unit of Kuwait Petroleum Corp, to submit second-round bids in mid-September along with Exxon and Shell, the people added.
"The management is of one mind and that is to sell the assets and refocus on North America," one person familiar with the matter told Reuters.
Newfield, the fourth-largest oil producer in Malaysia, has an interest in about 3.3 million net acres offshore Malaysia and about 290,000 net acres offshore China. The Malaysian fields accounted for 39 percent of Newfield's revenues in 2012, while the Chinese fields accounted for 3.3 percent.
Petroliam Nasional Bhd (Petronas), Malaysia's state oil firm, will be the key to the domestic sale, since it is the operator of some of the blocks in the Malay Basin in which Newfield holds an interest.
"Almost all the companies that got through for the Malaysian assets have a good working relationship with Petronas, which awards the production-sharing contracts. So it would be an easy fit then," one person familiar with the process said.
Newfield, which has a market value of $3.2 billion, warned of a 25-30 percent decline in its international production due to natural declines in its Malaysian fields among other factors.
Woodlands, Texas-based Newfield, Exxon and Shell declined to comment. Talisman did not reply to an email seeking comment, while KUFPEC could not be reached for comment. The sources declined to be identified as the sale process is confidential.
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