Equities

Chevron Sells Clair Stake, Buys Hess in $53B Deal

Chevron to sell its 19.4% stake in Clair oilfield, exiting North Sea after 55 years amid $53 billion Hess acquisition.

By Max Weldon

5/16, 12:13 EDT
BP p.l.c.
Chevron Corporation
Hess Corporation
Exxon Mobil Corporation
article-main-img

Key Takeaway

  • Chevron exits North Sea after 55 years, selling its 19.4% stake in Clair oilfield as part of a $15 billion divestment strategy.
  • The move precedes Chevron's $53 billion acquisition of Hess Corp, emphasizing capital discipline and strategic asset reallocation.
  • Proceeds from the sale aim to fund high-return projects, aligning with Chevron's focus on optimizing its portfolio for future growth and sustainability.

Chevron Exits North Sea

Chevron Corp. has initiated the sale of its 19.4% stake in the UK's Clair oilfield, signaling its departure from the North Sea, a region where it has been a significant player for over half a century. This move is part of a broader strategy by Chevron to divest up to $15 billion of assets as it prepares for the $53 billion acquisition of Hess Corp. The divestment includes interests in the Ninian and SIRGE pipelines, as well as the Sullom Voe Terminal. Chevron's exit from the North Sea is reflective of a broader trend among American oil majors, who have been reducing their presence in the region as it matures and production declines. The North Sea has been a critical area for oil exploration and production since the 1970s but is now increasingly dominated by European companies and private equity-backed drillers.

Strategic Divestment Amidst Changing Landscape

The decision to sell its North Sea assets, including the significant Clair oilfield stake, is driven by Chevron's strategic review of its global portfolio. This review emphasizes capital discipline and the reallocation of resources towards more competitive and strategic assets. The Clair oilfield, operated by BP plc, is one of the largest remaining untapped fields in the North Sea, with BP considering a third development phase known as Clair South. Chevron's divestment is expected to generate up to $1 billion, excluding tax benefits, reflecting the company's focus on investing in new, low-cost projects and maintaining capital discipline across both traditional and new energy sectors. This move follows Chevron's 2019 sale of several North Sea assets to Ithaca Energy and aligns with the industry trend of shifting focus from aging basins to more lucrative opportunities.

Portfolio Optimization in Focus

Chevron's strategy to streamline its portfolio ahead of the Hess Corp. acquisition underscores a deliberate shift towards optimizing its asset base for future growth. The company aims to focus on high-return, lower-cost projects, with the proceeds from the North Sea asset sale potentially freeing up significant capital for reinvestment in promising areas like the significant oil discovery in Guyana. This strategic reallocation of capital is indicative of Chevron's broader ambition to balance its traditional energy operations with investments in new energy sectors, ensuring long-term competitiveness and sustainability. The sale process, expected to take several months, highlights Chevron's commitment to capital discipline and strategic portfolio management in a changing energy landscape.

Management Quotes

  • Mike Wirth, CEO of Chevron:

    "This move follows Chevron's 2019 sale of several North Sea assets to Ithaca Energy. Over the past decade, other major companies like Exxon Mobil Corp."