News Summary

Chevron U.S.A. Inc. has finalized a deal to sell a 70% interest in its East Texas gas assets to TG Natural Resources LLC for $525 million. The agreement includes $75 million in cash and $450 million structured as capital carry for drilling and development. Chevron retains a 30% non-operated working interest, while TGNR expands its Haynesville inventory, adding over 250 gross locations. This move aligns with Chevron’s strategy to streamline operations and focus on renewable energy initiatives, targeting a divestment of $10-15 billion by 2028.

Chevron Sells Majority Stake in East Texas Gas Assets for $525 Million

In a significant move that’s making waves across the Lone Star State, Chevron U.S.A. Inc., a subsidiary of the global oil giant Chevron Corporation, has wrapped up a deal to sell a 70% interest in its East Texas gas assets to TG Natural Resources LLC (TGNR). The price tag? A cool $525 million. This transaction is a big step for Chevron as it looks to streamline its operations and focus on its more profitable ventures.

Breaking Down the Deal

The sale consists of $75 million paid in cold hard cash, with the remaining $450 million structured as a capital carry for drilling and development in the Haynesville region. Chevron isn’t totally out of the picture, though; they still hold on to a 30% non-operated working interest in this joint venture, plus an overriding royalty interest in these valuable assets. So, while they’ve sold a large chunk, they’re still in the game!

Who’s TG Natural Resources?

Now, who is this TG Natural Resources making such a splash? Well, they are backed by big names in the energy sector — owned indirectly by Tokyo Gas Co., Ltd. and Castleton Commodities International LLC, with the former holding around 93% of TGNR and the latter at about 7%. This partnership is looking to make the most of the deal, which is touted to add over 250 gross locations to TGNR’s Haynesville inventory. The deal could extend their inventory life for over 20 years at the pace they’re looking to develop.

What’s Next for Chevron?

Chevron’s leadership is all about optimizing their global energy portfolio with this move. They are aiming to divest $10-15 billion in assets by the year 2028. As of December 31, 2024, they’re sitting on approximately 72,000 net acres in the Haynesville shale, meaning there’s still plenty left on the table even after this sale.

Benefits All Around

One of the most interesting takeaways from this deal is how TGNR views the acreage they’ve just scooped up. They described it as “relatively undrilled” and knowing this can help them mitigate the parent-child effects between wells, which is a common concern in drilling practices. Operational synergies projected to exceed $170 million during the development phase make this partnership even more exciting.

Chevron’s Green Goals

This divestment also fits neatly into Chevron’s broader plans to reduce carbon intensity and ramp up growth in renewable fuels, carbon capture, and hydrogen technologies. By selling off non-core assets, they’re actively promoting a greener future while still maintaining a slice of the pie with retained interests.

Looking Ahead

Overall, this sale represents a crucial step for Chevron as it navigates the ever-changing landscape of energy. With a continued interest in the East Texas gas market while pursuing greener technologies, they’re poised to remain a key player in the industry. Exciting times are ahead for both Chevron and TG Natural Resources!

Chevron Divests Majority Stake in East Texas Gas Assets