Chevron Taking First Crack at $10 Billion Divestiture Target
The second-largest U.S. energy company is said to be shopping its Bangladesh assets, which are reportedly worth $2 billion, as it hopes to pare losses ahead of third-quarter earnings.
The nation’s second-largest energy company, Chevron (CVX) , is said to have confirmed Thursday it is shopping its Bangladesh assets.
Reuters reported early Thursday that the company confirmed it is in “commercial discussions” regarding the operations, citing a statement from an undisclosed official at Chevron in Bangladesh.
Earlier this week, Bloomberg reported the San Ramon, Calif. integrated oil major was seeking about $2 billion for natural gas assets in Bangladesh, citing undisclosed sources familiar with the matter.
The asset sale has attracted suitors including Indian and Chinese oil producers, Bloomberg said.
An international asset sale is no surprise, however, for the company, which is the second largest energy company behind only ExxonMobil (XOM) , as Chevron announced last October plans to see off $10 billion in assets by 2017.
To date, Chevron has made very little progress toward that mark, selling its small white oils and food machinery specialty lubricants business to German chemicals company Fuchs Petrolub SE for an undisclosed sum in May; a batch of refining, distribution and retail assets valued at between $75 and $300 million to private energy company Island Energy Services LLC in April; and a Calgary, Alberta-based subsidiary that owns a 43% non-operated interest in the Alberta Hub gas storage facility, a 42.7 billion cubic feet depleted-reservoir natural gas storage facility 80 miles west of Edmonton, Alberta, to a portfolio company of Boston private equity firm ArcLight Capital Partners LLC for an undisclosed sum in April.
Chevron is also said to be shopping its Asian geothermal assets, Bloomberg reported. The assets are thought to be worth as much as $3 billion. The company’s assets in Indonesia and Thailand may also be on the block, Bloomberg said.
Notably, news of the asset sales come just a few weeks ahead of Chevron’s third quarter earnings calls, as the company will hope to show investors’ improvement from its second quarter report in which it announced it’s third consecutive quarterly loss.
Chevron reported a loss of $1.5 billion, it’s biggest quarterly fumble since 2001, showing even the largest energy players are not impervious to a prolonged commodity rout.
Barclays analyst Paul Cheng lowered his third quarter earnings per share estimate for Chevron due to a larger-than-expected downtime in Asia at the company’s Tengiz oilfield in Kazakhstan and Guneshli oilfield in Azerbaijan.
The firm now estimates CVX worldwide production to be at 2.55 million barrels of oil equivalent per day versus its previous estimate of 2.6 million boe/d. As a result, the firm also lowered its fiscal year 2016 EPS estimate for Chevron to $1.10 per share from $1.20 per share.
Chevron shares closed at $102.15 apiece Wednesday, Oct. 13, a 0.9% drop from Tuesday’s price of $103.04 per share. Chevron shares are up 13.6% year-to-date but down 4.2% in the past three months.