Chevron Sells Stake In Chad & Cameroon For $1.3B - Analyst Blog

U.S. energy major, Chevron Corp. CVX announced that a subsidiary – Chevron Global Energy Inc. – has sold to the Republic of Chad its 25% non-operated interest in an oil producing acreage located in southern Chad, in addition to a stake in the related pipeline system. Chevron closed the deal on Jun 13 and received about $1.3 billion.

The assets under consideration include 7 oilfields located in the Doba Basin in which the company holds stake. These fields had an average net yield of 18,000 barrels of oil per day in 2013. The transaction also covers sale of Chevron's 21% non-operated interest in a pipeline that delivers oil to the Cameroon coast and other related marine facilities.

Chevron's management said that the sale is a strategic move to maximize the value of its upstream portfolio. The company also stated that though these assets have been profitable for its African operations in the past 14 years of holding, the current market scenario and size of the assets make it an ideal time to sell.

San Ramon, CA-based Chevron is the second largest U.S. oil company by market value, trailing Exxon Mobil XOM. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacture of chemicals as well as other energy-related businesses.

The company's current oil and gas development project pipeline is among the best in the industry, boasting large, multi-year projects. Chevron also possesses a healthy balance sheet. However, due to its integrated nature, the company is particularly susceptible to downside risk from any weakness in the global economy.

At present, Chevron has a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. market in the next one to three months. Meanwhile, one can consider better-ranked players in the integrated oil space like Sasol Ltd. SSL and Statoil ASA STO, both of which hold a Zacks Rank #2 (Buy).

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