Chevron Corp. (CVX) is getting rid of its half-share in Australian fuel company Caltex for an estimated $3.6 billion, the latest in a series of moves by Big Oil to conserve cash and concentrate on core businesses since the collapse in prices at the end of last year.
Chevron, which has slashed its investment budget for this year by 13% to $35 billion, earlier this month raised its target for asset sales to $15 billion over the next two years from $10 billion earlier.
The company has tasked Goldman Sachs (GS) with placing its 50% in Caltex with investors, in what would be the biggest block trade ever in Australia.
The disposal will help Chevron to fund, among other things, its massive Gorgon liquefied natural gas project in Australia, which remains a core part of the company’s portfolio. Despite its intention to withdraw from non-core areas, over three-quarters of Chevron’s upstream commitments are still outside the U.S., and the company still plans to increase its output of oil and gas by 20% by 2017.
Caltex is the biggest refiner and fuel retailer in Australia, with a chain of associated convenience stores. Conditions for refiners have been miserable for most of the last few years due to a sharp rise in competition from Asian refineries, and increasingly tight environmental regulation in advanced economies. The collapse in crude prices has helped many of them to restore profit margins, at least in the short term.