Chevron Accelerates Sale of Shallow Water US Gulf Assets

Chevron Corp. will accelerate its divestiture of mature shelf properties in the U.S. Gulf of Mexico, a company spokesperson confirmed to Rigzone.

The marketing of all its Gulf shelf assets is part of the company’s plan to adapt to the evolving business environment. This plan includes revising organizational structures, increasing efficiencies and reducing expenses, the spokesperson told Rigzone in an email statement.

As part of this plan, Chevron is transitioning to a deepwater-focused business with fewer, more complex assets.

“This process is consistent with Chevron’s ongoing efforts to align its portfolio of assets with overall long-term strategies,” the spokesperson said.

Divestment of these assets will begin this year; Chevron expects to complete this process by year-end 2017.

“Our asset sales program has been successful as well-timed transactions have captured good value and generated $11.5 billion in cash through the end of 2015,” the spokesperson said. “Over 2016 and 2017, we’re targeting another $5 billion to $10 billion in divestments.”

“In all cases, we will only sell assets where we can realize fair value.”

Tudor, Pickering and Holt analysts believe that Chevron can realize more than $1 billion in proceeds from these sales. According to Tudor, Pickering and Holt, Chevron reportedly is marketing 27 fields which produced around 46,000 barrels of oil per day in 2010 – 72 percent of which was liquids and 28 percent was natural gas – and generated $420 million of earnings before interest, taxes, depreciation and amortization in 2015.

“Despite the weak market, we believe that Chevron will still be able to monetize its U.S. Gulf of Mexico assets as there still appear to be buyers for producing assets,” according to a Feb. 19 Tudor, Pickering and Holt analyst note.

In addition to its Gulf shelf and Gulf pipeline assets, Chevron also is divesting assets in its New Zealand and South Africa downstream businesses, its Hawaii refinery and gas storage assets in Canada, Chairman and CEO John Watson said during the company’s fourth quarter 2015 earnings call.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com

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