Chevron (CVX) announced on Monday that one of its subsidiaries, Chevron Canada, will sell its 20% stake in the Athabasca Oil Sands Project and 70% interest in the Duvernay shale in Alberta, Canada, to Canadian Natural Resources (CNQ). This deal will be worth $6.5 billion and is expected to close in the fourth quarter of this year.
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Why Is CVX Selling Its Assets?
This asset sale is part of Chevron’s strategy to divest $10 billion to $15 billion worth of assets by 2028. The assets in Alberta, Canada, contributed 84,000 barrels of oil equivalent per day (boepd) to Chevron’s oil production last year. Following the close of the deal, Canadian Natural will own 90% of the Athabasca Oil Sands project, while Shell (SHEL) will retain the remaining 10%. Canadian Natural also stated that, with the addition of the Duvernay assets, it aims to boost its oil production by 122,500 boepd by 2025.
Meanwhile, Chevron intends to strengthen its presence in some key regions and plans to allocate over 75% of its production budget to key areas such as the U.S. shale basins, the Gulf of Mexico, the Eastern Mediterranean, Guyana, Australia, and Kazakhstan.
Is CVX a Buy, Sell, or Hold?
Analysts remain cautiously optimistic about CVX stock, with a Moderate Buy consensus rating based on eight Buys and five Holds. Over the past year, CVX has declined by more than 5%, and the average CVX price target of $173.08 implies an upside potential of 14.8% from current levels.
