Upcoming AWS Coverage on MagneGas
LONDON, UK / ACCESSWIRE / March 23, 2017 / Active Wall St. blog coverage looks at the headline from Chevron Corp. (NYSE: CVX) as the Company announced on March 22, 2017, that it has agreed to sell its South African assets for about $900 million under an attempt to redefine its growth strategy. China Petroleum & Chemical Corp. has agreed to buy the assets as a part of its plan to expand in international markets. Register with us now for your free membership and blog access at:
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One of Chevron's competitors within the Major Integrated Oil & Gas space, MagneGas Corp. (NASDAQ: MNGA), is estimated to report earnings on March 22, 2017. AWS will be initiating a research report on MagneGas following the release of its next earnings results.
Today, AWS is promoting its blog coverage on CVX; touching on MNGA. Get all of our free blog coverage and more by clicking on the link below:
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Breaking down the Agreement
Under terms of the agreement, the state-owned Chinese Company, also known as Sinopec, stated that it will acquire Chevron's 75% stake in the business. The stake includes a 100 thousand barrel-a-day refinery in Cape Town and a lubricants manufacturing facility in Durban. The remaining 25% will be held by local shareholders. Sinopec has invested more than $6 billion in downstream business in over 6 countries over the past five years. It was selected as the preferred bidder for assets that had generated interest from trading houses such as Viton Group, Gunvor Group, and France's Total S.A.
Details of the Sale
Chevron has executed the sale of its South Africa business as a part of a three-year divestment program announced in 2014. The US oil producer made unsuccessful attempts to step growth through new fuel storage facilities, but the stringent clean-fuel standards from the Government forced them to reconsider the sale of its SA assets. Chevron estimated that it would need to spend $1 billion in order to upgrade the refinery, hence, selling it off, was a viable option.
Sinopec views multiple growth opportunities, where the demand in South Africa for refined petroleum has increased by 5% annually over the past five years, to a current 27 million tons. Sinopec initially partnered with South Africa's national oil Company PetroSA to help develop a new greenfields refinery but it got shelved owing to greater costs.
Chinese Oil Corp.
Sinopec was reportedly offered the opportunity owing to the better terms and conditions of the offer. Additionally, Sinopec will retain Chevron's Caltex brand for the retail stations for up to 6 months before launching a rebranding strategy. Sinopec announced on March 22, that it intends to maintain the entirety of the local workforce and ensure that the operations and service to customers are uninterrupted during the ownership transition.
Chevron's Growth Strategy
Chevron has not only aimed at selling ownerships of its downstream businesses. In an attempt to raise cash with the oil price rout, Chevron is set to divest upstream assets for approximately, $5 billion. The US based energy Company's strategy is selling assets in an attempt to achieve growth through inorganic expansion. In July 2016, Chevron approved a $37 billion expansion of the Tengiz oilfield in Kazakhstan, where it operates in consortium with Exxon Mobil (NYSE: XOM) and Russia's Lukeoil. The Company plans to bolster production to 39 million tons of crude per year, or 850 thousand barrels per day, by 2022.
Stock Performance
Chevron's share price finished yesterday's trading session at $108.39, rising slightly by 0.32%. A total volume of 8.10 million shares exchanged hands, which was higher than the 3 months average volume of 6.36 million shares. The stock has surged 13.12% and 18.19% in the last six months and past twelve months, respectively. The stock currently has a market cap of $205.19 billion and has a dividend yield of 3.99%.
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