ChevronTexaco plans to sell about 60% of its total U.S. properties, and may also sell some producing and midstream assets in western Canada. The divestitures are part of the company's North American portfolio optimization program. Longer term, the company expects to retain about 400 core fields. "We expect to retain nearly all of our current earnings, cash flow and resource base, and to improve our overall competitiveness," says Ray Wilcox, vice president of ChevronTexaco and president of ChevronTexaco Exploration and Production Co. The U.S. properties for sale are in 15 states and in the Gulf of Mexico. While they represent more than 60% of ChevronTexaco's total domestic properties, they account for only 5% of U.S. daily production-some 48,000 BOE a day out of a total of approximately 940,000 BOE. Most are nonoperated joint ventures and royalty-only interests. Lehman Brothers analyst Paul Cheng says that out of the 48,000 BOE a day, the Gulf of Mexico shelf will account for 13,000; the Permian Basin, 22,000; and South Texas and other areas, 13,000. The assets are 50% oil. Canadian assets being considered for divestment consist of midstream assets and mature fields currently producing 35,000 BOE per day. The company will not sell strategically significant assets, including the Athabasca oil-sands project, MacKenzie Delta gas, activities on the eastern coast of Canada, or its refining and marketing operations. Cheng says ChevronTexaco is on the right track to substantially raise its financial performance during the next several years through active portfolio management, better exploration successes, development of legacy assets and more importantly, strict discipline in capital allocation and deployment. The proposed asset sales will likely result in a small loss of near-term earnings, he adds. He estimated proceeds from the sales may total $750 million to $1 billion. i
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