X

Sign Up To Our Free Newsletter

Join Now

Thanks for subscribing to our free newsletter!

ERROR

  • 3 minutes Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen.
  • 7 minutes Scientists Warn That Filling The Sahara With Solar Panels Is A Bad Idea
  • 11 minutes United States LNG Exports Reach Third Place
  • 15 minutes Joe Biden's Presidency
  • 1 hour U.S. Presidential Elections Status - Electoral Votes
  • 18 hours Interest article about windmills and waterwheels in Europe
  • 1 day Chance for (Saudi)Arabian peninsula having giant onshore Gas too?
  • 13 hours Retired RAF pilot wins legal challenge over a wind farm
  • 2 days Speaker Pelosi, "Tear Down This Wall"
  • 2 days Disaster looming in UK offshore wind power
  • 1 day “Cushing Oil Inventories Are Soaring Again” By Tsvetana Paraskova
  • 2 days NYT:  The Supreme Court’s order (Re:  Trump’s tax returns) set in motion a series of events that could lead to the startling possibility of a criminal trial of a former U.S. president
China's Oil Reserves Near Limit

China's Oil Reserves Near Limit

China's crude oil reserves have…

Oil Rig Count Inches Higher As Prices Drop

Oil Rig Count Inches Higher As Prices Drop

After having taken a breather…

Why Is Mexico Returning To Coal?

Why Is Mexico Returning To Coal?

Mexico is turning to coal…

Andy Tully

Andy Tully

Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com

More Info

Premium Content

Chevron Hoping To Raise $3.6 Billion In Australian Asset Sale

There are a lot of ways to indemnify an energy company against a dwindling income from plummeting oil prices. One is to lay off workers. One is to postpone or even abandon plans for bold new projects. And one is to sell off valuable assets to raise cash.

Chevron is picking Door Number Three. It said March 27 that it planned to raise about US $3.6 billion (Aus $4.6 billion) by agreeing to sell its 50 percent share in the Australian oil-refining company Caltex Australia Ltd., which owns Australia’s biggest refinery, situated in Brisbane, as well as about 1,800 service stations around the country.

In a statement, Michael Wirth, Chevron’s executive vice president for refining, distribution and marketing, made it sound like a routine affair. “This transaction reflects Chevron’s commitment to regularly review our portfolio and generate cash to support our long-term priorities,” he wrote. “It is aligned with our previously announced asset sales commitment.” Related: Three Triggers That Will Send Oil Crashing Again

Yet earlier this month, Chevron increased by half its goal for proceeds from asset sales between 2014 and 2017, up from US $10 billion to US $15 billion. It also suffered a 30 percent drop in profit in the fourth quarter of 2014 compared with the same period the year before. That amount, US $3.5 billion, was its lowest since the recession year of 2009.

As Chevron has suffered, Caltex Australia has thrived, making it a valuable property to sell if one needed the money. Its shares have risen more than threefold since 2010, and rose fully 74 percent in the past year alone.

The reason is that the company reduced its reliance on refining, with its capricious revenues. The drop in oil prices has been difficult for Australian refiners, who must contend with older equipment and higher costs. Many such companies, including Caltex Australia, have either been forced to restructure their refining procedures or shut down refineries altogether. Related: Oil Markets Blow Yemen Crisis Out Of Proportion

But Caltex Australia has also directed more attention on marketing, which remains consistently profitable.

Goldman Sachs, which is underwriting the sale, is offering to sell 135 million shares of Caltex Australia to institutional investors at US $26.65 each, The Wall Street Journal reports. This price is 9.7 percent less than Caltex Australia’s closing price on March 27. Such discounts are common incentives to potential buyers when companies want to sell large blocks of shares.

The Chevron-Caltex Australia transaction is the biggest block trade in Australian history. Until now, the largest such transaction was in 2010, when Royal Dutch Shell sold Woodside Petroleum Ltd. shares for about Aus $3.3 billion..  Related: Forget Rig Counts And OPEC, Media Bias Is Driving Oil Down

As for Caltex Australia’s future operations, a company spokesman said in a statement that Chevron was emphatic that its sale of the Australian company was merely part of a broader review of its portfolio. “There will be no change to our ability to reliably and competitively deliver all our customers’ fuel requirements,” the spokesman wrote.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News