Chevron to sell $15 billion of assets, cut spending amid price slump

Fuel Fix ^ | March 10, 2015 | Robert Grattan

[thackney]

Chevron Corp. said Tuesday it would sell off more assets and cut back on capital spending, as the integrated oil and gas giant looks to protect its finances from lower crude prices.

Chevron said it would put about $15 billion of assets up for sale through 2017 — up from a previous $10 billion target — and cut capital spending incrementally to roughly $30 billion in 2017. In January, Chevron had said it would trim capital spending to $35 billion in 2015, down about $5 billion from its 2014 budget.

Despite the cuts, the San Ramon, California-based company said it expects to see 20 percent production growth to 3.1 million barrels of oil equivalent a day by 2017.

Chevron wasn’t specific about what assets would hit the auction block. In a presentation to analysts made in New York, Chevron Chairman and CEO John Watson told investors they’re focused on selling holdings either at the beginning of end of their life. Proceeds will help bring the company back toward a neutral cash flow over the next years.

“We’re committed to delivering free cash flow to cover the dividend in 2017 and growing free cash flow thereafter,” Watson said.

Last year, the Chevron said it would sell $10 billion in assets between 2014 and 2016. The program has now been expanded to span 2014-2017 and the target hiked to $15 billion. The company sold $6 billion in assets in 2014.

Chevron stock was down about 90 cents or 0.9 percent to $103.05 midway through trading Tuesday.

[billorites]

There’s consolidation in the energy sector afoot.

[voicereason]

Cutting back on capital spending by a company the size of Chevron means a lot less dollars flowing through the economy. But hey....let’s all stay Bullish on the market.

[thackney]

Get ready for oil deals: shale is going on sale
http://fuelfix.com/blog/2015/03/11/get-ready-for-oil-deals-shale-is-going-on-sale/

A decision by Whiting Petroleum Corp., the largest producer in North Dakota’s Bakken shale basin, to put itself up for sale looks to be the first tremor in a potential wave of consolidation as $50-a-barrel prices undercut companies with heavy debt and high costs.

For the first time since wildcatters such as Harold Hamm of Continental Resources Inc. began extracting significant amounts of oil from shale formations, acquisition prospects from Texas to the Great Plains are looking less expensive.

Buyers are ultimately after reserves, the amount of oil a company has in the ground based on its drilling acreage. The value of about 75 shale-focused U.S. producers based on their reserves fell by a median of 25 percent by the end of 2014 compared to 2013, according to data compiled by Bloomberg. That’s opening up new opportunities for bigger companies with a better handle on their debt, said William Arnold, a former executive at Royal Dutch Shell Plc.