As per media releases, Chevron New Zealand, the subsidiary of U.S energy giant Chevron Corporation CVX, has offloaded its 11.4% interest in Refining NZ, the operator of Marsden Point Oil Refinery – New Zealand’s only oil refinery.
Chevron sold its interest to institutional investors for roughly $59 million. The move reflects the company’s aim to streamline its Asia-Pacific portfolio for countering the effects of a weak oil pricing environment. The sale also strengthens the integrated firm’s balance sheet.
This is not Chevron’s first Asia-Pacific asset divestment. In March this year, the company had sold its 50% interest in Caltex Australia for approximately $3.7 billion. Notably, Caltex is the largest refiner in the country. Other integrated energy players like BP plc BP and Royal Dutch Shell plc RDS.A vended their Australia and New Zealand refineries in the recent years.
San Ramon, CA-based Chevron is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.
The company has an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting large, multi-year projects. The company’s financial flexibility and strong balance sheet are real assets in this highly uncertain period for the economy. Chevron remains in excellent financial health, with nearly $13 billion in cash on hand and an investment-grade credit rating with a debt-to-capitalization ratio of 18%.
However, the ongoing oil price slump has adversely affected Chevron’s cash flow, particularly at its upstream unit which is its largest earnings generating segment.
Weighing such factors, Chevron currently carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, a better-ranked player in the energy sector is Pipeline Corporation PBA, which sports a Zacks Rank #1 (Strong Buy).
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