CHEVRON WILL SELL AUSTRALIA
Chevron abandoned Australian shale exploration and said it will sell its 50% stake in that nation's largest oil refiner.
Chevron notified Beach Energy, its partner in the central Australian shale project, that "the opportunity does not align strategically" with the US explorer's portfolio, according to a statement from Beach. Selling its half of refiner Caltex Australia is expected to yield about A$4.7 billion ($3.7 billion.)
Chevron announced plans earlier this month to shed $15 billion in oil and natural gas assets by the end of 2017 and reduce spending on new projects for the next two years. Chairman and CEO John Watson is raising cash and curbing expenditures after the plunge in global oil prices dented profits and made some fields less attractive to drill.
"They are perhaps looking to increase their margins and get away from businesses that offer lower-end margins," said David Lennox, a resource analyst at Fat Prophets in Sydney. "They are getting knocked around a bit," by oil prices.
Chevron entered Australian shale two years ago when it pledged to invest $349 million in Beach's Nappamerri Trough gas project. Beach said on Friday that it will seek other partners and continue studies at the site through June 2016. Icon Energy is also a partner in the venture.
Chevron has been trimming its refining portfolio for the past decade to focus on higher-margin investments such as oil drilling. The company sold about $14 billion in refineries, filling stations and related assets between 2004 and the end of last year.
Chevron is selling its shares in Caltex Australia at A$35 apiece, a 7.6% discount to Friday's close, people with knowledge of the matter said.
The deal underwritten by Goldman Sachs is the largest block trade ever in Australia, exceeding Royal Dutch Shell's sale of Woodside Petroleum shares in 2010 for about A$3.3 billion, according to data compiled by Bloomberg. So-called cornerstone investors agreed to buy about A$2 billion of the Caltex stock before the offering started, the people said, asking not to be identified discussing private information.
Caltex, the biggest Australian-based refiner, has risen 74% in Sydney in the past 12 months. It closed Friday at A$37.88.
Chevron expects to sell the shares in Caltex to a broad range of Australian and global institutional investors, the San Ramon, California-based company said in a statement.
In the Asia-Pacific region that includes Australia, Chevron's net cash refining margins were less than $1/bbl during the last four years, compared with more than $6 at its North American plants.
The moves will have no impact on Chevron's Gorgon and Wheatstone gas-export projects in the country, the company said.
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IEA - For the third consecutive year, global energy investment declined, to USD 1.8 trillion (United States dollars) in 2017 – a fall of 2% in real terms. The power generation sector accounted for most of this decline, due to fewer additions of coal, hydro and nuclear power capacity, which more than offset increased investment in solar photovoltaics.
EIA - Crude oil production from the major US onshore regions is forecast to increase 143,000 b/d month-over-month in July from 7,327 to 7,470 thousand barrels/day , gas production to increase 1,066 million cubic feet/day from 69,466 to 70,532 million cubic feet/day .
U.S. FRB - Industrial production rose 0.6 percent in June after declining 0.5 percent in May. For the second quarter as a whole, industrial production advanced at an annual rate of 6.0 percent, its third consecutive quarterly increase. Manufacturing output moved up 0.8 percent in June.
U.S. DT - The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $69.9 billion. Of this, net foreign private inflows were $58.8 billion, and net foreign official inflows were $11.1 billion.