Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Chevron to Sell Stake in Canada’s Duvernay Shale
02/06/2024
Chevron is selling its Canadian shale production operations as part of a wider plan to concentrate its investments on more profitable projects in the United States.
“Chevron is committed to safely delivering the affordable, reliable, ever-cleaner energy Canada and the world needs.“
Chevron Corp is selling its 70% stake in Alberta's Duvernay shale formation. The area, rich in unconventional hydrocarbons, extends over 245,000 net acres. The Duvernay assets have a production capacity of approximately 40,000 barrels of oil and gas daily. The estimated value of these assets is up to $900 million. Chevron first announced its intention to develop this area in 2017, following a three-year appraisal period. By the end of 2022, 243 wells in this field had been connected to production facilities.
Chevron's 2022 production in the area included 126 million cubic feet of natural gas and 17,500 barrels of condensate and natural gas liquids. Their extraction method involves horizontal drilling and hydraulic fracturing. Chevron believes this business holds substantial current value and growth potential, likely appealing to companies with similar portfolios.
Kuwait Foreign Petroleum Exploration Co.'s subsidiary, KUFPEC Canada Inc., owns the remaining 30% stake.
“The Duvernay is looking like a hot spot for this year so it’s not surprising that M&A is happening. Murphy Oil Corp, which holds 4,000 boepd of Duvernay production and sold a portion of its assets there for C$150 million ($111.3 million) last year, will likely watch Chevron’s sale process closely. If Chevron gets a good price I’d not be surprised to see Murphy selling.”
- Phil Skolnick, an analyst at brokerage Eight Capital
Expectations
Chevron expects a stronger portfolio post-merger to boost these asset sales.
Chevron has announced plans to sell assets worth up to $15 billion before taxes by 2028. This strategy was revealed when Chevron agreed to merge with Hess Corp. in October, a deal involving a $60 billion all-stock transaction that includes debt. This follows Chevron's acquisitions of Noble Energy Inc. and PDC Energy Inc. in 2020 and 2023.
The Hess acquisition is set to be finalized in June 2024. Chevron plans to allocate two-thirds of its 2024 upstream capital budget, approximately $14 billion, to its U.S. operations. This includes about $6.5 billion for tight assets, with $5 billion dedicated to the Permian Basin.
Additionally, Chevron has earmarked $1.5 billion for downstream capital expenditure.
“We’re maintaining capital discipline in both traditional and new energies.”
- Chief executive Mike Wirth of Chevron
In 2021, Shell PLC, a British company and Chevron's competitor, sold its Duvernay light oil position to Crescent Point Energy Corp., based in Calgary, Alberta. The sale to Crescent Point involved assets producing 30,000 barrels of oil equivalent per day and encompassed 450,000 net acres, with the deal valued at $707 million.
The Duvernay play is among Canada's leading shale regions. Other notable companies with substantial stakes in the area include Crescent Point and PetroChina's Canadian division. Recently, Athabasca Oil and Cenovus Energy entered into a joint venture to boost their operations in the play.
The field has experienced a significant increase in licensing activity and enhancements in productivity. The cost of drilling a well has reduced substantially, from as high as CAD 20 million ($14.85 million) per well a decade ago to between CAD$10 million and CAD$15 million currently.
About Chevron Corporation
Chevron Corporation, a global energy leader, reported a decrease in earnings in the third quarter of 2023, with $6.5 billion compared to $11.2 billion in the same period of 2022. Despite this, they returned a record $20 billion to shareholders, 27% higher than the previous year. The company is shifting its focus, evident in strategic acquisitions like PDC Energy, Inc., and a majority stake in ACES Delta, LLC, the largest green hydrogen production and storage hub in the U.S.
Chevron is refocusing its upstream investments, allocating over 75% of its capital to strategic areas such as U.S. shale basins, the Gulf of Mexico, the Eastern Mediterranean, Guyana, Australia, and Kazakhstan.
If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
2023 Closes with a Wave of Deals: Canada to Permian Basin
-Crescent Point Energy finalized its $1.9 billion purchase of Hammerhead Energy to expand operations in Alberta's Montney Shale -Two Canadian companies merged to increase their presence in Alberta's Kaybob Duvernay area -Ring Energy completed acquisition in the Permian Basin
Hess Corp. Increases Drilling Activity Before Chevron Takeover
Hess Corp. is in the final stages of a major sale to Chevron, with increased drilling and production in the Bakken region noted in the last quarter. Hess announced its fourth-quarter net production in the Bakken reached 194,000 barrels of oil equivalent per day (boe/d), a slight increase from the third quarter's 190,000 boe/d and a significant 23% rise from the 158,000 boe/d seen in the fourth quarter of the previous year. This growth is attributed to more drilling and the impact of the previous year's severe winter weather.
OXY has been the leader in Permian Basin production for the past five years. Currently, the Houston-based oil and gas company is deepening its presence in the basin with a $12 billion acquisition of CrownRock, adding over 94,000 acres in the Midland Basin and increasing its oil output by about 170,000 barrels per day. Occidental announced an increase in its proved reserves to 4.0 billion barrels of oil equivalent by the end of December 2023, up from 3.8 billion the previous year. Activities in the Permian largely fueled this rise. Occidental added approximately 303 million barrels through infill development projects as well as new discoveries and the further development of existing fields brought in another 153 million barrels.
TotalEnergies kicked off 2024 with a net income of $5.7 billion in the first quarter, marking a modest 3% increase from the same period last year and a 13% rise from the previous quarter. This growth occurred despite experiencing drops in both the volume and price of gas sales over the year and the quarter. Their adjusted net earnings, which exclude one-time or unusual items, were $5.1 billion. This represents a significant 22% decline compared to last year and a slight 2% drop from the last quarter. The company's earnings before tax, depreciation, and amortization reached $11.5 billion, while their cash flow from operations significantly decreased to $2.2 billion, falling by 58% from last year and a steep 87% from the previous quarter. TotalEnergies also recorded $644 million in impairments.
New Mexico leads the Rockies region in gas production and ranks as the sixth-largest in terms of active gas wells in the U.S. Last year, the state's gas well count slightly increased by 0.2% to 30,699, with new additions in both the northwestern San Juan Basin and the southeastern Permian Basin. Meanwhile, just to the north in Colorado, gas producers grew by a modest 0.1% to 30,322, primarily due to increased drilling activity in the DJ and Piceance basins. Wyoming saw a decline in its active gas wells by 3.7%, down to 17,006, with production mainly in Sublette, Sweetwater, and Converse counties reflecting stable or slightly reduced drilling activity. Utah also experienced a slight decrease of 0.2% in its number of gas wells, totaling 6,463. In Q1 2024, oil and gas industry activity in Oklahoma, Colorado, and northern New Mexico experienced a decline. This marks the fifth consecutive quarter of contraction in drilling and business activities within these regions. According to a survey that included responses from 33 firms operating in the Rockies, this downtrend is expected to continue over the next six months.