Premier oil and gas company, Chevron Corporation (CVX) has agreed to sell its fuels marketing and aviation businesses in parts of the Caribbean and Central America to Vitogaz, S.A. The latter is an affiliate of RUBIS, a France-based petroleum company.
The deal, whose financial terms were not disclosed, is expected to be sealed by the end of third quarter 2011, subject to approval from local regulatory authority and government.
As per the company spokesperson, the deal comprises the sale of a network of 174 service stations operating under the Texaco brand, an equity interest in an associated refinery operation, proprietary and joint-venture terminals and aviation facilities. Chevron’s commercial and industrial fuels business will also be acquired by Vitogaz.
The assets to be divested spread over the regions of Antigua, Barbados, Grenada, Dominica, St. Lucia, St Vincent, Guyana, St. Kitts, French Guiana, Martinique, Guadeloupe, Trinidad, Nicaragua, Costa Rica and Belize.
The sale forms a part of Chevron’s strategy of redesigning its asset portfolio through the disposition of high-cost, low-profit generating properties. In the near term, the company aims to focus on optimizing the downstream resources along with reducing the capital employed and achieving higher growth targets.
California-based Chevron has one of the most promising sets of oil and gas prospects, capable of providing long-term production growth and reserve additions among its peers such as BP Plc (BP), Exxon Mobil Corp. (XOM) and Royal Dutch Shell plc (RDS.A).
We are maintaining our long-term Neutral recommendation on the stock. Chevron currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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