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Chevron stops funding for Kitimat LNG

BRITISH CHEVRON announced last week that it was was also continuing to work on improving Kit-
COLUMBIA stopping directing funding to the proposed Kit- imat LNG’s cost-competitiveness. However, few
imat LNG project on the British Columbia coast other updates on the project have come recently,
in Western Canada. and Woodside had also previously said it was
The move follows an effort by the super-ma- seeking to sell part of its stake in Kitimat, though
jor to sell off its 50% stake in the Kitimat project, no buyer has emerged for either any of its interest
which it was engaged in since December 2019. or for Chevron’s.
Last week, Chevron noted that it had continued A Tudor, Pickering, Holt & Co. analyst, Matt
seeking a buyer, despite complications caused Murphy, commented that the decision by Chev-
by the coronavirus (COVID-19) pandemic, but ron to stop funding Kitimat LNG had come as no
had also carried on with certain work related to surprise given the super-major’s failed attempt to
the project alongside its joint venture partner, sell its stake in the venture.
Woodside Energy. This work included agreed “This is a portfolio-specific decision by Chev-
project activities that were anticipated to add ron to be pretty choosy about how they allocate
value to the asset or were required for regulatory capital,’’ he said. “There was ample opportu-
and operational compliance. nity for other parties to come in and take over
However, Chevron has now declared its intent the project and proceed with it. I think the fact
to cease funding any further feasibility work for no one did is just further support for industry
Kitimat LNG, on which a final investment deci- broadly being fairly choosy in how they’re allo-
sion (FID) has not yet been taken. cating capital.’’
Woodside, for its part, reiterated its commit- The 18mn tonne per year (tpy) Kitimat LNG
ment to the project, and said it was working with would use feedstock gas from the Liard and Horn
Chevron to “find a mutually acceptable solution River basins in north-east BC. This requires a
that enables the project to progress and Chevron 480-km gas pipeline to be built to the liquefac-
to exit”. The Australian company added that it tion plant, adding to its cost.™

Ovintiv announces $880mn Eagle Ford sale

TEXAS INDEPENDENT producer Ovintiv announced
this week that it had struck a deal to sell its assets
in the Eagle Ford shale to Validus Energy for
$880mn.
This comes after Reuters reported on March
12 that Ovintiv was in advanced talks with pri-
vately owned Pontem Energy Capital over a
sale for more than $800mn, with a deal poten-
tially being announced later in the month. (See
NorthAmOil Week 11) And indeed, according
to Validus’ website, it is financially backed by
Pontem, as well as certain other unnamed insti- debt target in the first half of 2022.
tutions and private investors. Over the course of 2021, output from Ovin-
The sale comprises all of Ovintiv’s assets in the tiv’s Eagle Ford assets is predicted to average
Eagle Ford, which the company – then known 21,000 barrels of oil equivalent per day (boepd),
as Encana – acquired from Freeport-McMoRan including 14,000 barrels per day (bpd) of crude
for roughly $3.1bn in 2014. Now renamed and and condensate.
based in the US instead of Canada, Ovintiv is The company has also adjusted its full-year
whittling down its portfolio further to a few core and first-quarter production guidance to take
shale assets. into account asset sales and the impact of dis-
Ovintiv has also been pursuing a debt reduc- ruptions caused by winter storms in February. It
tion programme, and said that with the sale to now anticipates producing roughly 190,000 bpd
Validus it had now exceeded its target for asset of crude and condensate in 2021, inclusive of a
sales. The company now anticipates its debt to 10,000 bpd impact from asset sales.
be below $5bn by the end of 2021, assuming oil The sale to Validus comes weeks after Ovin-
prices of $50 per barrel of West Texas Interme- tiv ended a proxy fight with private equity firm
diate (WTI) and NYMEX gas prices of $2.75 per Kimmeridge Energy Management, which had
million British thermal units ($76.07 per 1,000 urged the company to adjust its capital expendi-
cubic metres). It then expects to achieve its $4.5bn tures and focus on governance.™

Week 12 25•March•2021 www. NEWSBASE .com P9