Chevron said it hopes to raise A$4.6 billion ($3.6 billion) by selling its entire 50% stake in Australia’s largest refiner, Caltex. The deal marks the largest-ever block trade in Australia. The second-largest energy company in the US is selling the shares at a 10% discount, as part of a strategy to divest $15 billion in assets in response to low oil prices.
“This transaction reflects Chevron’s commitment to regularly review our portfolio and generate cash to support our long-term priorities. It is aligned with our previously announced asset sales commitment,” said Michael Wirth, Chevron’s executive vice president, Downstream and Chemicals.
Chevron, like many of its peers, has been scaling back its investments in downstream and marketing of fuels in order to focus on E&P, which is typically a higher-margin segment of the business.
Chevron said the current trademark licensing agreement between Chevron and Caltex will remain in effect following the transaction. Further, the company “will continue to ensure a reliable, high-quality supply of product is available to Caltex to supply to its retail and reseller franchise network.”
As noted above, the block trade is the largest in Australia’s history, surpassing Shell’s A$3.3 billion and A$3.2 billion trades in 2010 and 2014, respectively. Both trades were aimed at selling down the Anglo-Dutch major’s position in Woodside Petroleum.
In recent months, speculation concerning Chevron’s plans for its Caltex stake has become more frequent, particularly after Shell sold down part of its stake in Woodside last year. The US-based major’s announcement earlier this month that it planned to sell an additional $US5 billion (A$6.4 billion) of assets revived speculation about a possible sell-down of Caltex.
Chevron said its Caltex sell-off does not alter its “focus on moving the Gorgon and Wheatstone liquefied natural gas (LNG) projects towards start-up. Chevron is one of Australia’s largest foreign investors and is the largest holder of natural gas resources in the country.”
The company also said it is committed to seeking long-term business opportunities with Caltex.