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Chevron Ends 55-Year North Sea Operations Ahead Of Hess Deal: Report

Published 16/05/2024, 16:55
© Reuters.  Chevron Ends 55-Year North Sea Operations Ahead Of Hess Deal: Report

Benzinga - by Shivani Kumaresan, Benzinga Staff Writer.

Chevron Corp. (NYSE:CVX) is set to sell its remaining oil and gas assets in the UK North Sea, concluding its 55-year presence in the region.

The U.S. energy giant’s decision to divest comes as it gears up for the $53 billion acquisition of Hess Corp. (NYSE:HES), a move that involves up to $20 billion in global asset sales, reported Reuters.

The North Sea exit signifies another step in the gradual retreat of leading oil and gas companies from the aging British basin, which led the way in deepwater production in the 1970s.

Chevron’s holdings include a 19.4% stake in the BP plc (NYSE:BP)-operated Clair oilfield, the largest in the British North Sea, producing 120,000 barrels per day.

BP is considering a third development phase for the field, known as Clair South, which is one of the largest remaining untapped fields in the North Sea.

In addition to its stake in the Clair oilfield, Chevron plans to divest its interests in the Sullom Voe oil terminal and the associated Ninian and SIRGE pipeline systems.

Industry sources suggest that the sale, expected to be formally launched in June, could generate up to $1 billion, excluding tax benefits.

The exit is part of Chevron's strategy to streamline its portfolio and focus on more profitable assets, according to CEO Mike Wirth.

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 (NYSE:XOM) and Shell PLC (NYSE:SHEL) have also sold their North Sea assets, reflecting a broader industry trend.

Chevron's decision to sell its North Sea assets is driven by a review of its global portfolio, emphasizing capital discipline in both traditional and new energy sectors.

Despite speculation, Chevron stated that this move is unrelated to the 35% windfall tax imposed by the British government on North Sea producers following the 2022 surge in energy prices.

Chevron stock has gained more than 6% in the last 12 months. Investors can gain exposure to the stock via SPDR Select Sector Fund – Energy Select Sector (NYSE:XLE) and IShares U.S. Energy ETF (NYSE:IYE).

Price Action: CVX shares are trading flat at $161.27 at last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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