Chevron Unloads Assets in the Haynesville Shale

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Bruised U.S. supermajor Chevron Corporation (NYSE:CVX) (Houston, Texas) said Tuesday that it expected to generate more than $1.2 billion in value from the sale of a majority interest in gas assets in eastern Texas.

Chevron U.S.A., a division of the parent Chevron, said it closed a transaction to sell its 70% interest in Texas gas assets to an affiliate of Tokyo Gas Company (Tokyo, Japan) for $525 million. Some of the cash would support further development of the Haynesville shale play through a joint venture with the Tokyo company.

"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," the company said. "Chevron expects to maintain future upside through the joint venture structure while accelerating development of a non-core asset through a capital efficient approach."

Chevron has plans to divest as much as $15 billion in assets from its global portfolio by 2028.

The U.S. Energy Information Administration (EIA), the data arm of the U.S. Department of Energy, said it expects higher prices for natural gas this year will support more upstream activity in the Haynesville play.

Producing almost no oil, the Haynesville is the third-largest inland gas producer in the United States. EIA expects production to average 14.1 billion cubic feet per day (Bcf/d) this year and increase to 16.5 Bcf/d by next year.

Oil basins such as the Permian are starting to get tapped out and the resultant pressure differences in the wells make them gassier, though takeaway capacity can be a restraint. But in the Haynesville, DT Midstream Incorporated's (NYSE:DTM) (Detroit, Michigan) Louisiana Energy Access Project (LEAP) Phase 3 project expanded the existing pipeline's capacity by 0.2 Bcf/d to nearly 2 Bcf/d from the Haynesville region to Gulf Coast markets.

Chevron last year announced plans to move its headquarters from its campus in San Ramon, California, to Houston, Texas. The plans, announced in August, coincided with the retirement of several front-office staff, including 35-year staff veteran Nigel Hearne, who retired as the executive vice president of oil, products and natural gas at Chevron.

By February, the company had announced that some of its senior leadership was reshuffled, while it consolidated its oil, products and gas business into two units--upstream and downstream, and midstream and chemicals.

The company later trimmed about 9,000 positions from its payroll, or about 20% of its global workforce. Leaning instead on robotics and artificial intelligence, Chevron said the cuts were necessary to stay competitive in the global market.

Elsewhere, U.S. President Donald Trump in February revoked the license given to Chevron to work in Venezuela, saying Venezuelan President Nicolas Maduro was not making good on electoral reform promises. Venezuela produces the heavier type of crude preferred by U.S. refiners, though imports into the U.S. economy are only around 200,000 barrels per day. That's barely 2% of total U.S imports.

Chevron stood out against its peers during the fourth quarter by posting total earnings of $3.3 billion, a 43% improvement over the same period in 2023. But full-year earnings declined 17%, or about $3.7 billion, to $17.7 billion.

The company releases its first quarter earnings report on May 2.

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