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Chevron Ponders Sale Of $2.5 Billion Stake In Athabasca Oil Sands Project

Chevron HQ

Chevron is pondering the sale of its 20 percent stake in the Athabasca Oil Sands venture in Canada for $2.5 billion, according to anonymous sources cited by Reuters in a recent report.

The company, which is the United States’ second-largest oil producer, has already spoken to investment banks regarding the logistics of a potential deal, one of the sources said.

Royal Dutch Shell agreed to sell a majority of its assets in Canadian oil sands projects to Canadian Natural Resources last month for a total of $8.5 billion.

Low-but-recovering oil barrel prices make it difficult for oil companies to turn a profit from extraction projects in the current business environment. The people who spoke to Reuters said that Chevron was close to coming to a decision regarding the Athabasca sale.

To conserve funds and ensure continuing profitability, the major companies are cancelling or postponing investments in new production ventures, especially complex, costly projects like the exploitation of Canadian tar sands and deep-offshore fields that only turn a profit when oil is selling at $80 to $100 or more per barrel. At the time of this article’s writing, Brent barrels traded at $55.71.

Chevron declined to comment on the matter.

In December, Statoil announced its decision to sell off its oil sands assets to Athabasca Oil Corp. in a deal worth $832 million. The Norwegian firm spent nearly a decade in Alberta’s oil sands, and will exit the play with a loss of at least $500 million.

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“This transaction corresponds with Statoil’s strategy of portfolio optimization to enhance financial flexibility and focus capital on core activities globally,” Lars Christian Bacher, the company’s executive vice president for international development and production, said in a statement. Translation: Canada’s oil sands are too expensive.

By Zainab Calcuttawala for Oilprice.com

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