Chevron, the U.S. oil major is looking to sell two collections of assets located at the Permian Basin; combined, the assets to be sold could value around $1 billion, according to sources quoted by Reuters.
Firstly, the assets are located in oil and gas fields, and they are currently operated by Chevron and Occidental. They span 57,000 net acres with production of about 10,100 barrels of oil equivalent per day.
Secondly, according to one of the sources, altogether the assets under sale consideration could amount for as much as $1,2 billion; based upon the strength of oil futures. The assets are also well positioned for long-term implementation of carbon capture.
Thirdly, sources also said that Chevron is evaluating other assets in the Permian, and elsewhere, in order to add them to the sale; company could also divest older assets over the year as it looks to boost investments in energy transition.
Moreover, according to the sources, the strategy by Chevron would be to focus its investments in its highest performing assets; while also focusing on energy transition. Such is the strategy of other major companies, such as Shell. However, Shell may exit the Permian Basin entirely.
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Chevron looking to invest in energy transition
In addition, Chevron has retained an investment bank to market some Permian oil and gas fields; valued at $879 million and has additional assets of more than $200 million available for sale elsewhere in the basin.
Furthermore, according to Reuters, company’s shares closed about 1% higher on the day at $104.74; moving late in the session after Reuters reported the planned divestures.
On the other hand, initial bid proposals were due by June 10, with a planned July 1 sale date for the larger package.
About the sale, Paul Sankey, lead analyst at Sankey Research in New York, said. “The big picture is that Chevron has one of the largest and most advantaged positions in the Permian; and is able to test the capital discipline of the industry with what it would consider marginal assets; ones that are a much smaller package than the Shell potential offering.”
Finally, the announcement comes after major oil companies such as Shell, and ExxonMobil faced intense pressure from stakeholders and investors, to change their business model; in order to better align to a climate and energy transitioning economy.