Chevron Planning $1B Permian Asset Sale

Chevron is reportedly planning to sell oil assets in the Permian that could fetch up to $1 billion, according to unnamed sources cited by Reuters.

According to Reuters, the supermajor has confirmed plans for sale involving conventional oil fields but did not specify the value of a possible deal or deals.

Chevron has hired an investment bank to find buyers for assets worth $879 million. It has also earmarked another $200 million worth of Permian fields for sale, sources told the media outlet.

A pickup in asset sales was expected as oil prices rebound, reaching the highest in more than two years. Companies, even as large as Chevron, could do with the additional cash while offloading non-core assets.

“The big picture is that Chevron has one of the largest and most advantaged positions in the Permian and is able to test the capital discipline of the industry with what it would consider marginal assets that are a much smaller package than the Shell potential offering,” Reuters quoted analyst Paul Sankey as saying.

Chevron’s low-cost Permian assets are its primary growth driver, Zacks analysts said earlier this week in an industry outlook.

In addition to its strict capital discipline and conservative spending plans, these assets should help it weather the effects of the latest crisis and continue growing.

Besides being more conservative with its spending plans than most peers, Chevron is also bucking a trend in business diversification that has had European supermajors scrambling to boost their exposure to wind and solar energy while reducing their oil and gas output.

Recently, the company said it had no plans to reduce its oil and gas production and start investing in wind and solar energy. That’s despite a majority of shareholders voting at the company’s latest AGM to have it reduce its Scope 3 emissions—the ones generated by the use of its products.

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