Chevron has closed on a deal to sell a 70% interest in its East Texas shale gas assets to an affiliate of TG Natural Resources LLC (TGNR), a company indirectly owned by Tokyo Gas and Castleton Commodities International LLC (CCI), for $525 million, with $75 million paid in cash and $450 million as a capital carry to fund Haynesville development.
Chevron will retain a 30% non-operated working interest in a joint venture with TGNR and an overriding royalty interest in the assets. Tokyo Gas and CCI own an approximate 93% and 7% interest in TGNR, respectively.
The transaction is anticipated to generate over $1.2 billion in value to Chevron at current Henry Hub prices through the multi-year capital carry, retained working interest, and overriding royalty interest. Chevron expects to maintain future upside through the joint venture structure while accelerating development of a non-core asset through a capital efficient approach.
This transaction supports Chevron’s previously announced plans to divest $10-15 billion of assets by 2028 in order to optimize its global energy portfolio.
This article was originally posted at www.worldoil.com
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