Global integrated energy company Chevron Corporation (CVX) announced that it has entered into an agreement with the Australian unit of Royal Dutch Shell plc (RDS.A) to sell a certain stake of its Wheatstone liquefied natural gas (LNG) project. Financial terms of the deal were not disclosed.
Per the terms of the deal, Shell will acquire 8% participating interest in the Wheatstone and Iago natural gas fields operated by Chevron that will supply the Wheatstone facility, located in Western Australia. Additionally, Shell will also take a 6.4% stake in the natural-gas-export plant.
Wheatstone, located about 124 miles north of Onslow, off Western Australia’s Pilbara coast, is one of the largest resource projects in the region. Coupled with the other prominent Gorgon Project, this facility will hold the leadership position among natural gas and LNG suppliers in the Asia-Pacific belt.
With this deal, Chevron’s interest in the Wheatstone project drops to 73.6%, while the other partners Apache Corp. (APA) and Kuwait Foreign Petroleum Exploration Co. hold on to a respective 13% and 7% interest.
Chevron will continue to act as the operator of the Wheatstone venture, phase one of which involves two LNG processing trains with an overall capacity of 8.9 million tons per annum and a domestic gas plant. The project is expected to be completed by 2016.
San Ramon, California-based Chevron is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses.
We believe that Chevron exhibits an impressive business model with an array of oil and gas development projects, healthy financial profile and a revised asset portfolio. However, we maintain a long-term Neutral rating on the stock considering volatile oil and gas prices, international business risks and the company’s high level of capital spending.
Chevron currently retains a Zacks #3 Rank (short-term Hold rating).
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