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Chevron Seeks Potential Buyer for Non-Core Kapolei Refinery - Analyst Blog

San Ramon, CA-based energy giant Chevron Corp. ( CVX ) is looking for a potential buyer for its Kapolei refinery − located at the Hawaiian island of Oahu - going by Bloomberg. The Kapolei plant, which has a roughly 54,000 barrels per day capacity, is one of the smallest refineries of the company.

Chevron is now seeking help from an investment bank to identify prospective buyers. According to a company spokesperson, Chevron has not yet decided on divesting the plant but is evaluating the interest level of the buyers.

The intention to sell the refinery reflects Chevron's plan to shed $10 billion worth non-core properties in the coming three years.

San Ramon, CA-based Chevron is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.

Chevron's current oil and gas development project pipeline is among the best in the industry, boasting large, multi-year projects. Additionally, the company possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities including strategic acquisitions.

However, Chevron has a high 2014 capital budget of $39.8 billion. This is expected to substantially increase Chevron's leverage and deteriorate its credit metrics. Additionally, the increasing capital intensity of its operations may result in reduced returns going forward.

As a result, Chevron currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the energy sector like Patterson-UTI Energy Inc. ( PTEN ), Cameron International Corporation ( CAM ) and Pioneer Energy Services Corp. ( PES ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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