Page 8 - NorthAmOil Week 22 2021
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NorthAmOil                                    INVESTMENT                                          NorthAmOil


       Chevron CEO signals willingness




       to sell oil sands stake




        ALBERTA          CHEVRON’S CEO, Mike Wirth, has made  Given the recent Chevron shareholder vote, it
                         comments suggesting that his company would  would be unsurprising if pressure grows on the
                         consider selling its 20% stake in the Athabasca  super-major to sell its oil sands interests too.
                         project, a Canadian oil sands mine.    “We’re not in the kind of fire-sale mentality,”
                           This comes as the super-major faces growing  Wirth said. “But if we got what we think is fair
                         investor pressure to do more to curb greenhouse  value for an asset like that, we’ve been willing to
                         gas (GHG) emissions and fight climate change.  transact on things that are of that scale and kind
                         Indeed, Chevron shareholders voted last week  of relative importance in the portfolio.”
                         nearly 61% in favour of a proposal to force the   The Athabasca project is operated by Cana-
                         company to cut its Scope 3 emissions – or those  dian Natural Resources Ltd (CNRL), Canada’s
                         generated by customers using its products. (See:  largest oil producer. The company is also taking
                         Oil giants face setbacks from shareholders over cli-  steps to decarbonise its operations and is devel-
                         mate change, page 11)                oping, testing or piloting a range of technologies
                           Speaking at Bernstein’s 37th Annual Strate-  to this end.
                         gic Decisions Conference, Wirth said the stake   Indeed, CNRL’s president, Tim McKay, said
                         in the Athabasca project generates “pretty good  last week that out of these technologies, a molten
                         cash flow” without needing much capital, but  carbonate fuel cell had captured his attention.
                         that he “wouldn’t deem it a strategic position”.  Such a fuel cell will be piloted at CNRL’s Scotford
                           A number of other international companies  Upgrader near Edmonton next year as part of a
                         have already exited the oil sands on concerns  project with the Canadian Oil Sands Innovation
                         about the resource’s emissions intensity, and  Alliance (COSIA). It will be 40% funded by the
                         because of the unfavourable price environment.  province’s Emissions Reduction Alberta.™


       Southwestern strikes $2.7bn




       deal to buy Indigo





        US               APPALACHIAN  Basin-focused producer  super-chilled fuel is booming and US shipments
                         Southwestern Energy has announced that it is  continue to hit new highs. The company said in
                         acquiring Indigo Natural Resources in a $2.7bn  its June 2 announcement that the deal expands
                         deal that will give it a position in Louisiana’s  its estimated margins for 2022 by 12%, resulting
                         Haynesville shale gas play. The move comes as  from low-cost access to “premium markets” in
                         a wave of consolidation continues to sweep the  the Gulf Coast LNG corridor.
                         US shale industry.                     The transaction makes Southwestern the
                           Indigo is the third-largest privately owned gas  third Appalachian Basin-focused producer this
                         producer in the US, with a pure play position in  year to diversify away from its pure-play posi-
                         the Haynesville. It is currently producing 1.0bn  tion, according to energy data analytics firm
                         cubic feet (28.3mn cubic metres) per day of gas,  Enverus. It is also the largest deal for a pure-play
                         with this set to rise to 1.1 bcf (31.2 mcm) per day  Haynesville shale producer since 2008, ahead of
                         by the time the transaction closes in the fourth  Comstock Resources’ acquisition of Covey Park
                         quarter of 2021.                     Energy for $2.2bn in 2019.
                           Southwestern expects the deal to increase   This is also the second major recent acqui-
                         its cumulative free cash flow (FCF) to around  sition for Southwestern after it took over fellow
                         $1.2bn over 2021-23 and boost its high-return,  Appalachian producer Montage Resources for
                         dry gas inventory with over 1,000 locations  $865mn in November 2020. Now it is trying
                         added. The company’s overall net production  to take advantage of strengthening gas prices
                         will rise by around a third to over 4 bcf (113  through an even larger deal.
                         mcm) per day of gas equivalent, consisting of   “The industry is overall bullish on the outlook
                         around 85% gas.                      for gas, and Haynesville provides one of the two
                           In addition, Southwestern will benefit from  major sources of low-cost supply along with the
                         access to the LNG export market on the US  Appalachian Basin,” commented Enverus’ ana-
                         Gulf Coast, at a time when demand for the  lyst Andrew Dittmar.™



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