Chevron Corporation (NYSE:CVX) is considering putting its geothermal assets in Asia on sale as a strategy to tackle the weak commodity prices and slow economic growth.
Anonymous sources familiar with the decision revealed that there is a likelihood that the company might proceed with the disposal. If Chevron decides to go ahead with the operation, the sale might be worth up to $3 billion as indicated by the sources who sought anonymity due to the private nature of the considerations.
Chevron is the second largest oil producer in the US while Exxon Mobil Corporation (NYSE:XOM) take the lead as the largest oil producer in the country. Chevron has involved financial advisors in the process, but so far they have not initiated any formal process. The company therefore not made a final decision on the matter and the sources claim that the sale might not even take place.
The company’s geothermal assets in Asia are mainly found in the Philippines and Indonesia while a few are scattered in other parts of the continent. The firm has already terminated its drilling projects and sent workers home to try and keep costs down amid declining energy prices. Chevron is also planning to sell its shares in the Indonesian natural gas and oil fields. One of the company’s spokespersons was asked to comment on the matter, but he said it is the company’s policy to conceal details on divestitures, mergers and acquisitions.
Zacks has given the company a sell rating, thus hinting that the firm’s stake will most likely be low for the next three months in the US equity market. The company is based in San Ramon California, but it has operations all over the world. The plans to dispose of the Asian holdings to place the company in the same category as Apache Corporation (NYSE:APA) and ConocoPhillips (NYSE:COP). The two firms are also in the oil industry, and they have also resulted to disposing of their assets due to the harsh economic conditions.