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Chevron Hunts Potential Buyer for North West Shelf LNG Sale

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Chevron Corporation (CVX - Free Report)  recently unveiled plans to divest its 16.67% stake in the North West Shelf project in Australia to some prospective buyer. The news comes soon after the company received several unsolicited offers from a number of credible buyers.

The oil industry is reeling under the adverse impact of coronavirus pandemic that battered most sectors until now. Fuel demand took a huge hit following large-scale travel constraints imposed globally. Against this backdrop of a pullback in oil prices, Chevron's stock price has shed 24.8% of value since the beginning of 2020 when crude was trading at more than $60 a barrel.

In a bid to bounce back from this drastic reduction in commodity prices, Chevron took various cost-curbing measures, such as slashing headcount by nearly 10-15%, trimming its 2020 capital spending guidance by 30% and now aiming to sell off the North West Shelf project as well.

Management at this San Ramon, CA-based company believes that this is the correct time to sell the North West Shelf project and watch out for fair value bids from potential buyers as the project is in a phase of transition at the moment. The North West Shelf development is looking to open its services to new suppliers. As of now, the project is selling gas owned by the just the project partners. This will allow the project to shift towards becoming a globally competitive third-party tolling facility.

Per some analysts, the amount of interest to be sold is estimated between $3 billion and $4 billion, lower than the pre-pandemic valuation of $6 billion due to a steep drop in LNG prices this year. Meanwhile, David Low, senior analyst with Wood Mackenzie, foresees Woodside Petroleum — operator of North West Shelf facility — as a highly suitable purchaser of the stake as it is financially healthy and is all set for merger-and-acquisition activities in Australia.

Apart from Chevron, the North West Shelf project is held by BP Plc (BP - Free Report) , Royal Dutch Shell Plc , BHP Group (BHP - Free Report) and Japan Australia LNG, which is Australia’s first LNG development. The project has been in operation since 1989 and has delivered more than 5,000 LNG cargoes to date.

About the Company

Chevron is one of the largest publicly-traded oil and gas companies in the world with operations spread to almost every corner of the globe. A component of the Dow Jones Industrial Average, this presently Zacks Rank #3 (Hold) Chevron is a fully-integrated entity, participating in every energy-related aspect, ranging from oil production to refining and marketing.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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