U.S energy giant Chevron Corporation CVX has entered into an agreement with Z Energy to sell its downstream operations in New Zealand. The deal is valued at $556.4 million.
The local gasoline retailer would acquire 100% stake in Chevron New Zealand (‘CNZ’), a wholly-owned subsidiary of Chevron, subject to necessary approvals.
The sale includes 146 Caltex service stations, 73 truck fueling stations and 10 terminal assets. Per the deal, Z Energy would also purchase Chevron’s lubricants sales and distribution business. These assets would further strengthen Z Energy’s portfolio of 210 Z service stations.
Chevron, like many of its peers, is selling assets to tackle the commodity pricing weakness. The ongoing oil price slump has adversely affected Chevron’s cash flow, particularly at its upstream unit, which is the largest earnings generating segment of the company.
Last week, Chevron offloaded its 11.4% interest in Refining NZ, the operator of Marsden Point Oil Refinery – the only oil refinery in New Zealand.
On Mar 29, Chevron concluded the sale of its entire stake in Caltex Australia Limited for $3.7 billion. Chevron sold off its 50% ownership in the company and added that the gain from the asset sale will likely be recorded in the second-quarter 2015 financial statements.
These asset sales should increase liquidity and strengthen the company’s balance sheet. Chevron is planning to divest assets worth $15 billion, 50% higher than the prior target of $10 billion, through 2017.
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.
Chevron currently carries a Zacks Rank #3 (Hold).
Better-ranked players from the oil integrated space include BP p.l.c. BP, Statoil ASA STO and Sasol Ltd. SSL. All these stocks hold a Zacks Rank #2 (Buy).
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