Yahoo Finance Will Chevron (CVX) Sell Its Stake in the ACG Oilfield to MOL?
Chevron Corporation CVX is reportedly set to divest its stake in a giant Azerbaijan oilfield to energy company MOL for a deal value of more than $2 billion.
Notably, Hungary-based MOL is a vertically integrated oil and gas multinational company engaged in exploration and production, refining, distribution and marketing, petrochemicals, power generation as well as trading and retail.
After 25 years of involvement on the oilfield project, both oil majors — Chevron and ExxonMobil XOM — are striving to sell respective interests in the BP plc BP-operated Azeri-Chirag-Gunashli (ACG) field, located offshore in the Caspian Sea. This strategic move is in a bid to concentrate on the domestic productions.
The ACG project was initially backed by five major US companies, namely ExxonMobil, Amoco, Unocal, Pennzoil and McDermott MDR and was considered “the contract of the century” by Azerbaijan and partners. The venture also drew substantial support from the US government.
The partners started production at the giant field in 1997. Developed in phases, the ACG project churned out 18,000 barrels of crude oil on average and 10 million cubic feet of natural gas daily in 2018.
The original deal struck in 1994 was aimed at developing Azerbaijan’s oil industry soon after the collapse of the Soviet Union. The field’s large reserves and hopes of major discoveries were expected to aid Europe diversify away from Russian oil and gas.
However, such beliefs faded away as no large discoveries were made. Eventually, most U.S. companies either abandoned the project or were taken over by rivals while support from the United States also receded.
Both Chevron’s and ExxonMobil’s stakes in this field were supposed to be bought by MOL but recently, MOL opted for seeking only Chevron’s 9.57% ownership in ACG. Meanwhile, ExxonMobil is still looking for a suitable buyer for its 6.8% interest in ACG.
Chevron carrying a Zacks Rank #3 is one of the largest publicly traded oil and gas companies in the world, 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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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