The 33-year-old from Whitby, Ont., was acquired by the Oilers two years ago in a trade that sent Milan Lucic to the Calgary Flames.
The one-time 40-goal scorer had just five goals and five assists in 29 games with the Oilers last year despite being one of their highest-paid forwards.
Watch below: Some Global News videos about James Neal.
If the Oilers buy out Neal’s contract, the team would be penalized under the NHL‘s salary cap system but would also have more money it can spend when NHL free agency begins on Wednesday.
A number of players who played for the Oilers last season will be free to sign with any NHL team as of Wednesday, including Tyson Barrie, Dmitry Kulikov, Slater Koekkoek, Jujhar Khaira, Dominik Kahun, Alex Chiasson, Tyler Ennis and Patrick Russell.
The Oilers are believed to be keenly interested in signing Zach Hyman, a winger who spent the past few seasons playing with the Toronto Maple Leafs. Last season, the 29-year-old Toronto native scored 15 goals and collected 33 points in 43 games with the Leafs.