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Chevron, Shell to Divest Refineries to Retain Profitability
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Per a research report recently published by Reuters, integrated major Chevron Corporation(CVX - Free Report) is contemplating the sale of its refinery and gasoline stations in Burnaby, British Columbia, while European peerRoyal Dutch Shell plc is seeking buyers for its refinery in Martinez, CA. These companies are putting small refineries up for sale to get rid of assets that are not performing as well as their higher margin businesses.
Per Reuters, Chevron is looking for interested potential buyers for the Burnaby refinery, its cardlock stations, gas stations and marine assets. The Burnaby refinery, which is the last large-scale refinery operating on the West Coast, is capable of processing 55,000 barrels of oil per day. However, not much information is available on Shell’s proposed divestment.
Given the recent recovery in crude prices, refining profit margins are expected to decline if the price of gasoline is not able to rise in sync with the increase in the oil costs. Hence, the companies intend to sell plants while margins are still reasonably high in order to exit the market without significant balance sheet damage.
San Ramon, CA-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.
Headquartered in The Hague, Netherlands, Shell explores for and extracts crude oil, natural gas and natural gas liquids. It has interests in chemicals as well as in power generation and renewable energy.
Currently, Chevron and Shell both carry a Zacks Rank #3 (Hold), implying that the stocks will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players in energy sector are Braskem S.A. (BAK - Free Report) , and PBF Logistics LP . Both these stocks sport a Zacks Rank #1 (Strong Buy).
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Chevron, Shell to Divest Refineries to Retain Profitability
Per a research report recently published by Reuters, integrated major Chevron Corporation(CVX - Free Report) is contemplating the sale of its refinery and gasoline stations in Burnaby, British Columbia, while European peer Royal Dutch Shell plc is seeking buyers for its refinery in Martinez, CA. These companies are putting small refineries up for sale to get rid of assets that are not performing as well as their higher margin businesses.
Per Reuters, Chevron is looking for interested potential buyers for the Burnaby refinery, its cardlock stations, gas stations and marine assets. The Burnaby refinery, which is the last large-scale refinery operating on the West Coast, is capable of processing 55,000 barrels of oil per day. However, not much information is available on Shell’s proposed divestment.
Given the recent recovery in crude prices, refining profit margins are expected to decline if the price of gasoline is not able to rise in sync with the increase in the oil costs. Hence, the companies intend to sell plants while margins are still reasonably high in order to exit the market without significant balance sheet damage.
San Ramon, CA-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.
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Headquartered in The Hague, Netherlands, Shell explores for and extracts crude oil, natural gas and natural gas liquids. It has interests in chemicals as well as in power generation and renewable energy.
Currently, Chevron and Shell both carry a Zacks Rank #3 (Hold), implying that the stocks will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players in energy sector are Braskem S.A. (BAK - Free Report) , and PBF Logistics LP . Both these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>