Chevron Corporation CVX, the second-largest U.S. oil producer, recently confirmed that it is contemplating the sale of its natural gas assets in Bangladesh to counter weak commodity prices. The assets that are likely to be sold produce natural gas and condensate from three fields in the northeast of the country.
In Bangladesh, Chevron operates the Bibiyana, Jalalabad and Moulavi Bazar fields. Moreover, the company sells all the production to state oil company Petrobangla. Its net daily production last year averaged 720 million cubic feet of natural gas and 3,000 barrels of condensate.
According to Bloomberg reports, Chevron is seeking about $2 billion from the potential sale of natural gas assets in Bangladesh. Notably, the proposed sale has drawn interest of several Indian and Chinese oil producers. WTI crude oil is trading around $50 per barrel, much lower than the $90–$100 per barrel mark reached just a few years ago. On the other hand, natural gas is being sold at around $3/MMBtu. As a result of the persistent weakness in commodity prices, the company’s earnings and cash flows have been severely affected.
Chevron’s upstream unit, which is its largest earnings generating segment, was the worst hit by the ongoing oil price slump, as its results are directly influenced by commodity price movements. Also, these negatives led to Chevron’s biggest quarterly loss since 2001 as indicated by its announcement in July.
Hence, Chevron has been selling assets to raise money and counter the losses. In October last year, the company disclosed plans to sell about $10 billion of assets by 2017.
CHEVRON CORP Price
San Ramon, CA-based Chevron is one of the largest global publicly traded oil and gas companies, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.
Chevron currently carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players in the broader energy sector include Evolution Petroleum Corp. EPM, Ultra Petroleum Corp. UPLMQ and Bill Barrett Corp. BBG. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, Evolution Petroleum posted an average positive earnings surprise of 45.84%.
Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.
In the current quarter, Bill Barrett posted a positive earnings surprise of 71.46%.
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