By Seher Dareen
(Reuters) – Chevron is selling its Athabasca Oil Sands and Duvernay Shale assets to Canadian Natural Resources for $6.5 billion, the oil giant said on Monday as it sets in motion its divestment plan.
The all-cash deal, expected to close on December 6, is part of the strategy to raise between $10 billion and $15 billion through asset sales by 2028, while increasing focus on regions as American shale gas and Kazakhstan.
The sale also gives Chevron more financial leverage in its fight with Exxon over its $53 billion bid for Hess. While the deal recently cleared an FTC review, a three-judge arbitration panel will review Exxon’s right of first refusal next May.
Chevron’s Canadian assets, based in Alberta, contributed 84,000 barrels of oil equivalent per day (boepd) to Chevron’s production in 2023. The Duvernay is one of the most important shale gas extraction sites in Canada.
Following the deal, Canadian Natural will own 90% of the Athabasca Oil Sands project, with Shell owning the rest.
“(The deal) offloads an expensive asset in the Chevron oil sands and the Duvernay assets, which do not appear to be competitive with the Permian position…,” said Allen Good, an analyst at Morningstar.
“Oil majors have turned away from the oil sands in recent years, this continues the trend.”
Canadian Natural said that together with the Duvernay assets, it would add 122,500 boepd of its targeted production in 2025. Both together would result in an additional $400 million in investment next year, company executives said in a conference call.
The company also increased its quarterly dividend by 7% to 56.25 Canadian cents per share, payable in January 2025, with chief financial officer Mark Stainthorpe saying the deal will immediately be accretive to cash flow and earnings.
Shares of Chevron rose 0.7% in afternoon trading, while Canadian Natural rose nearly 3.7% in a higher oil price environment.
(This story has been refiled to correct capitalization on asset names in paragraphs 1 and 5, and to pluralize asset sales in paragraph 2)
(Reporting by Seher Dareen in Bengaluru; Editing by Shilpi Majumdar and Arun Koyyur)
