Macro

Chevron Eyes $1B from Clair Sale, Shifts to Guyana Ops

Chevron to sell 19.4% stake in Clair oilfield, exiting North Sea to focus on strategic, high-return assets.

By Max Weldon

5/16, 11:19 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
BP p.l.c.
ConocoPhillips
Chevron Corporation
Hess Corporation
Exxon Mobil Corporation
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Key Takeaway

  • Chevron plans to sell its 19.4% stake in the UK's Clair oilfield, marking its North Sea exit after over 50 years.
  • The sale includes interests in Ninian and SIRGE pipelines and the Sullom Voe Terminal.
  • Part of a $15 billion divestment strategy to fund buybacks and invest in a Guyanese oil discovery through Hess Corp. acquisition.

Chevron Exits North Sea

Chevron Corp. has announced its intention to sell its 19.4% stake in the UK's Clair oilfield, marking its departure from the North Sea after over 55 years of operations. This move includes the sale of interests in the Ninian and SIRGE pipelines, as well as the Sullom Voe Terminal. The decision is part of Chevron's broader strategy to divest up to $15 billion of assets, streamlining its portfolio in anticipation of its $53 billion acquisition of Hess Corp. This strategic shift aims to reallocate capital towards more competitive and strategic assets, including a significant oil discovery in Guyana as part of the Hess deal.

Strategic Divestment Amidst Changing Landscape

The North Sea, once a bastion of oil exploration and production led by US oil giants, has seen a shift towards European companies and private equity-backed drillers as production began to decline in the early 2000s. Chevron's exit follows a trend of reducing footprints in the region by other American oil majors like Exxon Mobil Corp. and ConocoPhillips. The sale, expected to fetch up to one billion dollars, reflects Chevron's focus on maintaining capital discipline and investing in new, low-cost projects. The Clair oilfield, operated by BP and producing approximately 120,000 barrels per day, represents a significant portion of the UK's oil production.

Portfolio Optimization in Focus

Chevron's decision to divest its North Sea assets is underscored by a comprehensive portfolio review aimed at focusing on assets that are strategic and competitive for future capital allocation. This includes a shift towards new energies and maintaining capital discipline across traditional energy assets. The sale process, expected to take several months, highlights Chevron's commitment to optimizing its global portfolio. The company's move aligns with its strategy to concentrate on high-return, lower-cost projects, and could potentially free up significant capital for reinvestment in promising areas like the Guyanese oil discovery.

Management Quotes

  • Chevron statement:

    "The process is expected to take multiple months and may or may not result in a sale."