US oil giant, Chevron has slashed its involvement with Australia in a big way – selling off its 50% stake in Caltex Australia (CTX) and deciding not to proceed with the tight rock oil and gas drilling projects with Beach Energy (BPT) and Icon Energy (ICN).
Chevron sold its entire stake in Caltex Australia Ltd for about $4.6 billion after nearly 40 years of involvement, thanks to the slide in oil prices and the need to cut costs and raise cash.
Chevron sold 135 million shares in Caltex at a price of $34.20 each, a 9.7% discount to Friday’s close of $37.888 (up 0.9% on the day).
Caltex shares are up just on 11% so far this year, while the ASX 200 is up 9.4%.
But Caltex shares will jump today despite the weaker wider market.
CTX 1Y – Chevron offloads Caltex stake
The company will almost certainly either make a huge one off return of cash to shareholders, or a share buyback, or a combination of both because sitting in its balance sheet is around $1 billion in franking tax credits that Chevron was unable to utilise.
That pile of cash and the prospect of using it to reward shareholders, old and new, is what made the sale of the Chevron stake easier than it looked.
Chevron is the latest global oil major to leave Australia’s refining industry. Last year, Royal Dutch Shell Plc sold its Australian petrol station and refinery operations (in Geelong, after closing its Sydney refinery several years ago) for $2.9 billion. BP which shut down its Bulwer Island oil refinery in Brisbane, is also selling its Australian bitumen business.
Global oil traders Vitol, Glencore and Trafigura have entered the Australian industry. Glencore has assembled a network of distributors, Trafigura has bought a number of independent distributors and retailers, while Vitol bought Shell’s operations.
In a statement, a Caltex spokesman said that Chevron had made clear its sale was part of a broader portfolio review.
"There will be no change to our ability to reliably and competitively deliver all our customers’ fuel requirements," the spokesman said.
