Chevron sells assets worth $6.5 billion to Canadian Natural Resources

Chevron announced on Monday that it would sell its assets in the Athabasca Oilsands and Duvernay Shale fields to Canadian Natural Resources at a price of $6.5 billion. This is part of its divestment plan.

The cash-only transaction is part of the company's strategy to sell assets worth $10 to $15 billion by 2028.

Chevron will be able to produce 84,000 barrels equivalent per day (boepd), based on the assets located in Alberta Canada.

Wood Mackenzie reported in January that the Duvernay was one of Canada's most important shale plays, with eight deals totaling $2.9 billion over the past three years.

Shell will hold the remaining 10%. After the deal is completed, Canadian Natural owns 90% of the Athabasca oil sands project.

According to the company, along with Duvernay's assets, it will add 122,500 boepd to its target production by 2025.

The company also increased its quarterly dividend to 56.25 Canadian Cents per share payable in January 2025. Finance chief Mark Stainthorpe said the deal would immediately increase cash flow and earnings.

Canadian Natural had long-term debts of C$9.33billion as of June 30, 2008.

Chevron is looking to spend over 75% of their production budget in the United States shale basins. They also plan on spending it in the Gulf of Mexico and the Eastern Mediterranean.

The FTC had cleared the deal with Hess for $53 billion, but it will have to overcome a challenge from Exxon and CNOOC. Hess's joint venture partners in Guyana, Exxon, are challenging this. The case will be heard by a three-judge arbitral panel in May.

Chevron shares were up 1% in the morning, despite higher oil prices.

(source: Reuters)