Chevron to Acquire Stake in Kitimat LNG Project (CVX)
With aim to enhance its natural gas exports, Chevron Corp. (NYSE: CVX) on Monday announced that it has agreed to acquire 50 percent stake in Kitimat LNG project, currently held by EnCana Corp. (NYSE: ECA) and EOG Resources Inc.—a move which allow world’s no.2 energy company to gain its traction in Canadian liquefied business.
Chevron said it will buy EnCana’s and EOG’s 30 percent stakes in the LNG export project for an undisclosed price. However, according to Citi Research analyst, Robert Morris, EnCana and EOG each were offered nearly $450 million for their stakes and the exploration lands.
According to the agreement, Chevron would buy the two companies’ interest in the pipeline project at Kitimat, 400 miles north of Vancouver, and will pay $550 million for a 50 percent stake in 644,000 acres of natural gas exploration lands in the Horn River and Liard shale-gas fields, held by Apache Group.
Subsequently, Apache will pay Chevron$150 million to increase its stake in the British Colombia Project and associates lands to 50 percent.
Analysts believe that Chevron’s presence in the project will increase the chances of multi-billion dollar Kitimat project to be completed. The Kitimat LNG project is believed to the most advanced of a very few gas-export facilities available at British Columbia’s northern Coast and Chevron’s deep-pockets is expected to bring financial stability in the project.
“With Chevron involved it will happen sooner than it otherwise would have,” said Michael Dunn, an analyst with FirstEnergy Capital.
In a statement, Chevron’s Vice-Chairman, Gorge Kirkland, said “This investment grows our global LNG portfolio and builds upon our LNG construction, operations and marketing capabilities. It is ideally situated to meet rapidly growing demand for reliable, secure, and cleaner-burning fuels in Asia, which are projected to approximately double from current levels by 2025.”
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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