Chevron share price up, to sell 50% Caltex stake

Chevron announced on Friday that is aiming to sell its stake in Australias fuel company Caltex as the U.S. energy group slashes non-core assets in the wake of low oil prices.

The company is looking to sell 135 million Caltex Australia shares, reflecting its 50% stake in the company. If successful the transaction would be the biggest block trade in Australian history.

The company is offering its shares at A$34.20 a piece, representing a 9.7% discount to Caltexs closing price on Friday, implying a deal value of around A$4.6 billion. Goldman Sachs is the sole underwriter of the transaction.

Michael Wirth, executive vice president of downstream and chemicals, said that the company would use the generated funds to support Chevrons “long-term priorities”.

Chevron is the latest company to dispose of Australian assets, last year rival Royal Dutch Shell sold of its petrol station and refinery business to Vitol in a deal valued at A$2.9 billion. BP, another oil major, closed down a refinery in the country and announced the sale of its asphalt business. Oil prices have fallen around 60% since last June.

Caltex, which is the leading oil refiner in Australia, posted an after-tax profit of A$20 million for the past year, way down compared to the A$530 million in 2013. Last year, the company closed down its Kurnell refinery following in the steps of rival companies.

The sale is also a part of Chevrons “previously announced asset sales commitment.” Mr. Wirth said. Earlier this moth, the company said it would look to sell $15 billion worth of assets during the next two years, up for the $10 billion that the company had previously targeted.

The company said that despite the sale of Caltex, Chevron will move forward with its Gorgon and Wheatstone liquefied natural gas projects.

“Asia-Pacific is a core strategic focus for Chevron’s downstream business and we remain focused on ensuring our operations, portfolio and investments are well-positioned to meet the region’s growing demand for energy,” said Mark Nelson, Chevron’s president of international products, downstream and chemicals.

Chevron lost 0.40% on Thursday and closed at $105.25 in New York, marking a one-year decrease of 10.59%. The company is valued at $198.68 billion. On Friday the stock was up 0.19% to $105.45 during pre-market trading.

According to the Financial Times, the 21 analysts offering 12-month price targets for Chevron have a median target of $112.00, with a high estimate of $133.75 and a low estimate of $95.00. The median estimate represents a 6.41% increase from the last closing price.