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Chevron eyes GoM shelf divestments

Written by  Monday, 22 February 2016 10:33

In the Gulf of Mexico, Chevron is putting its focus on its deepwater assets, and is on the fast-track to sell its shelf assets in the area, as the company looks to divest up to US$10 billion in the next two years.

Big Foot. Image from Chevron.

Cam Van Ast, Chevron media advisor told OE that Chevron is accelerating the sale of mature shelf properties and has begun marketing all shelf assets in the Gulf. The divestments will begin in 2016 and are expected to be completed by the end of 2017.

“Chevron is continuing to adapt to the evolving business environment by revising organizational structures, increasing efficiencies and reducing expenses,” Van Ast said in an emailed statement. “In the Gulf of Mexico, this includes transitioning to a deepwater-focused business with fewer, more complex assets.”

In the company’s overall asset sales program, Chevron was able to generate $11.5 billion in cash through the end of 2015.  

“Over 2016 and 2017, we're targeting another $5 billion to $10 billion in divestments. In all cases, we will only sell assets where we can realize fair value,” Van Ast said.

According to Chevron’s Q4 2015 earnings call, some of its in-progress transactions in its $5-10 billion divestment plan include upstream and pipeline assets in the Gulf of Mexico shelf.

Should Chevron be successful in its sale of shelf assets, which include 27 fields that produced some 46,000 b/d in 2010, the company may be able to walk away with more than $1 billion, according to news reports.

Chevron’s key projects in the Gulf of Mexico include Tahiti, Big Foot, Blind Faith, and Jack St. Malo, with the latter two being the company’s deepest operated offshore production facilities at 7000ft (2134m) water depth.

In January, Chevron announced in its Q4 call that it was canceling its deepwater GoM project, Buckskin-Moccasin that hit the company with a $500 million charge.

"I won't say that that project couldn't have gone forward and that it wouldn't meet minimum thresholds depending upon your forward view of prices," Chevron's Chairman and CEO John Watson said in the call on 29 January. "But, relative to our alternatives, we felt that for the foreseeable future, we've got better places to put our money. And so we made the very difficult decision to not go forward with that project." 

The company reported a $588 million loss for the quarter.

Read more:

Chevron cancels Buckskin-Moccasin

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