Written by Nia Williams and Sabrina Valle
HOUSTON (Reuters) – Chevron said on Friday it will sell its shale gas operations in Canada's Duvernay Shale as it continues to streamline its global operations following several major acquisitions.
The asset produces approximately 40,000 barrels of oil and gas per day from approximately 235,000 acres in the Duvernay field in central Alberta and could sell for up to US$900 million.
Chevron said it plans to deliver between $10 billion and $15 billion in assets following deals with Hess Corporation, PDC Energy and Noble Energy that significantly expand oil and gas production.
“We are in a strong position and proud of our track record at Duvernay,” a spokesperson told Reuters. “This business has significant value for both current production and potential growth opportunities, and we expect it to be attractive to other companies with complementary portfolios.”
The company's other Canadian operations are not affected, the spokesperson said.
Based on recent acquisitions of the DuVernay property by Crescent Point and others, the property could be worth $900 million, said Brian Lidsky, director of Houston-based advisory firm Energy Advisors Group. estimated.
Chevron first announced plans to develop the East Kaybob area in Duvernay, Alberta in 2017 after spending three years evaluating the area. As of the end of 2022, his 243 wells on site were connected to production facilities.
In 2021, Chevron shelved plans to build a large liquefied natural gas project from Kitimat on Canada's west coast that would export up to 10 million tonnes a year.
Duvernay is one of Canada's top shale operations. Other companies with significant positions in the region include Crescent Point and the Canadian arm of PetroChina. Last month, Athabasca Oil and Cenovus Energy formed a joint venture to accelerate operations in the play.
The sector is seeing a surge in licensing activity and productivity gains, with costs ranging from as high as C$20 million ($14.85 million) per well a decade ago, according to analysts at brokerage Eight Capital. However, it has now fallen to between 10 million and 15 million Canadian dollars.
“DuVernay is beginning to become a key industry focus and is therefore likely to gain investor attention in 2024,” the firm's analysts wrote in a research note this month.
“Operators have done enough digging to understand how to optimize the technology.”
($1 = CAD 1.3467)
(Reporting by Nia Williams in British Columbia and Sabrina Valle in Houston; Editing by Gary McWilliams and David Gregorio)
