Chevron (CVX, Financial) is selling its stakes in two Canadian shale assets to Canadian Natural Resources (CNQ, Financial) for $6.5 billion in cash. The deal includes a 20% interest in the Athabasca Oil Sands project and a 70% interest in the Duvernay Shale, which together produced 84,000 barrels of oil equivalent per day in 2023.
Key points:
- CNQ's stock is rising due to the acquisition and strong crude prices. The company also increased its quarterly dividend by 7%, expecting the new assets to boost production by 60,000 barrels per day by 2025.
- CVX's sale aligns with its strategy to focus on its Permian Basin and Guyana assets, despite the strong production from the Canadian assets.
- Last October, CVX announced a $53 billion all-stock acquisition of Hess Corporation (HES, Financial), expanding its presence in Guyana with the Stabroek block. This deal was approved by the Federal Trade Commission on September 30, 2024, with the condition that HES CEO John Hess cannot join CVX's Board of Directors.
- CVX now holds a 30% stake in Stabroek, with over 11 billion barrels of oil equivalent in discovered and recoverable resources. The acquisition is expected to enhance cash flow in 2025, with cost synergies of about $1 billion.
- CVX's Permian Basin assets are achieving record production, contributing to an 11% increase in Q2 global net oil-equivalent production. CVX plans to divest $10-$15 billion in other assets, including its stakes in Athabasca and Duvernay.
This transaction is beneficial for both CVX and CNQ. CNQ acquires valuable assets in Alberta, while CVX advances its focus on the Guyana and Permian Basin regions.
