Quietly chipping away at its divestiture goal, Chevron Corp. (NYSE: CVX) has reportedly sold off a bulk of its assets in the Gulf of Mexico (GoM).
Cox Oil Offshore LLC said it completed a transaction on April 15 to acquire a number of Chevron's GoM shallow-water assets. The acquisition includes 19 fields and associated assets located primarily on the GoM Outer Continental Shelf and in Louisiana state waters.
Though financial aspects of the deal will not be disclosed, the move aides Chevron's efforts to shed assets. The San Ramon, Calif.-based company is aiming to bring in between $5 billion to $10 billion through divestitures by year-end 2017.
“We will divest assets that no longer have a strategic fit or do not compete for capital with our other investment alternatives,” Chevron CEO John Watson said during a January conference call. “In all cases, we will only sell assets where we can realize fair value.”
Watson noted that the company is pursuing additional opportunities which will be disclosed “when commercial sensitivities permit.”
In its deal with Cox, a privately-held company based in Dallas, Chevron is selling 170 active wells, 70 platforms, 70 caissons and other offshore structures. Also, more than 100 Chevron employees will join Cox's team as part of the transaction.
Rough Waters
Chevron has hit a rough patch since the tanking in commodity prices. The company reported in January it took a fourth-quarter loss of more than half a billion dollars. That is a 117% swing from reported 2014 earnings of $3.5 billion.
In response, Chevron has pared spending down for the next several years. The company's 2016 capital budget has been set at $26 billion, down from $35 billion in 2015.
The company also has plans to slash spending even further for 2017 and 2018, targeting between $17 billion to $22 billion in capex.
In March, Chevron announced plans to shift its spending focus to deepwater, LNG and shale oil projects, such as its holdings in the Permian Basin.
In addition, the company said it would cut its workforce by 4,000 in 2016. More than 650 of those jobs will be in Houston, according to Fuel Fix.
Sales Targets
As for asset sales, Chevron’s deals in progress include downstream facilities in New Zealand and South Africa and its refinery in Hawaii, according to a Jan. 29 presentation by Chevron.
The Hawaii refinery is being sold to One Rock Capital Partners, the private equity firm said April 19. Industry estimates have pegged the deal's value between $75 million and $300 million, according to a Reuters report.
Chevron already completed the sale of Western Canadian gas storage facilities on April 4.
So far this year the company has marketed at least 142,000 gross acres through EnergyNet. Assets have included:
- 42,641.7 gross (33,350.14 net) acres in the Marcellus Shale in Pennsylvania and West Virginia;
- 35,072.865 gross (28,940.88 net) acres in the Marcellus Shale in Pennsylvania;
- 15,963.12 gross (6,759.92 net) acres in Texas in the Permian Basin;
- 24,960 gross (24,200 net) mineral acres in Florida; and
- 23,459.01 gross (21,833.63 net) acres in Kansas in the Anadarko Basin.
The prolonged drop in commodity prices has also spurred several other companies to look at discarding noncore assets.
To cover its 2016 capex, Anadarko Petroleum Corp. (NYSE: APC) announced plans to seek out asset sales of up to $3 billion. The company has already signed and closed agreements to divest about $1.3 billion so far in 2016.
ConocoPhillips (NYSE: COP) plans divestitures starting with an exit from deepwater and a selloff of noncore assets, including natural gas resources. In December, the company said it had agreements in place to generate $2.3 billion in proceeds when deals close by year-end 2015 or in first-quarter 2016.
Emily Moser can be reached at emoser@hartenergy.com.
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