Chevron Corporation is looking to sell its oil and gas assets in the Eagle Ford basin in South Texas. Sources familiar with the matter confirmed Reuters after the news outlet saw a marketing document this Friday.
The company estimates that the assets on sale have a total developed resources value of around $1 billion. However, including the undeveloped territory, the assets could be valued as high as $3.8 billion, especially after the rising oil and gasoline prices.
Oil prices traded at around $69 dollar a barrel, while gasoline prices were around $4 dollars per gallon; at those prices, the asset’s value goes way up. According to Reuters, the prospective buyers could acquire the portfolio for around $2 billion.
This is not the only asset sale strategy by the company. In fact, many companies have been selling oil and gas assets, in an attempt to take advantage of the rising crude oil prices and to divest from non-core assets for further investment.
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Divesting of o&g assets came as the company held talks with Engie No. 1
Particularly for Chevron, the company has plans to resume buy back shares in the current quarter. To achieve that, the company stepped up its sales program in June and has two collections of shale gas fields in the Permian Basin. As we reported previously, together, those assets have a value of $1 billion.
Andrew Dittmar, senior M&A analyst at Enverus, said about the Chevron sale. “From Chevron’s perspective, a sale further streamlines their upstream operations as they narrow their focus to the largest and most economic oil and gas projects; while further diversifying their business to stay abreast of changes in the industry.”
He also remarked. “They are likely hoping to capitalize on a resurgent Eagle Ford M&A market; largely driven by interest from private equity buyers. The basin has seen over $2 billion in deals so far this year, compared to just $500 million in 2020 and $1 billion in 2019.”
Finally, the sale of the oil and gas assets, also comes as Chevron held talks with activist hedge fund Engine No. 1 to detail its plans to cut carbon emissions. As we reported previously, Engine No. 1 won three board seats at Exxon Mobil in May.