Chevron Announces Sale of Majority Interest in its East Texas Gas Assets

Rhea-AI Summary

Chevron (NYSE: CVX) has announced the sale of a 70% interest in its East Texas gas assets to TG Natural Resources (TGNR) for $525 million. The deal includes $75 million in cash and $450 million as a capital carry for Haynesville development. Chevron will maintain a 30% non-operated working interest and an overriding royalty interest in the joint venture.

The transaction is expected to generate over $1.2 billion in value at current Henry Hub prices through the multi-year capital carry, retained working interest, and royalty interest. This sale aligns with Chevron's strategy to divest $10-15 billion in assets by 2028 to optimize its global energy portfolio.

Positive

• Sale generates substantial value of over $1.2 billion at current prices
• Maintains future upside through 30% working interest and royalties
• Accelerates development of non-core asset through capital-efficient approach
• Advances progress toward $10-15 billion asset divestment goal

Negative

• Reduction in operational control over East Texas assets
• Decreased direct exposure to potential gas price upside with 70% stake sale

Insights

Financial Analyst

Chevron's sale of a 70% interest in its East Texas gas assets represents a strategically positive transaction that aligns with its broader portfolio optimization initiative. The deal structure is notably capital-efficient: Chevron receives $75 million in immediate cash plus a substantial $450 million capital carry for Haynesville development while retaining meaningful upside through a 30% working interest and an overriding royalty interest.

The transaction's projected $1.2 billion in value generation (at current Henry Hub prices) demonstrates shrewd financial engineering. Rather than a complete divestiture, Chevron has effectively secured development funding for a non-core asset while maintaining exposure to potential upside. This approach reduces capital requirements and risk exposure while preserving long-term value potential.

This deal represents approximately 5% of Chevron's stated $10-15 billion divestiture target through 2028, indicating steady progress on their portfolio reshaping initiative. The relatively small immediate cash component suggests this transaction is primarily about optimizing capital allocation rather than generating liquidity.

For investors, this transaction demonstrates Chevron's disciplined approach to capital management - maintaining future growth potential while reducing near-term capital commitments on non-core assets. The joint venture structure with Tokyo Gas provides a strong operational partner, enabling continued development with reduced financial obligations for Chevron.

Energy Industry Expert

This transaction highlights Chevron's pragmatic approach to natural gas asset management in the current market environment. The East Texas assets, likely primarily focused on Haynesville Shale production, represent valuable but capital-intensive natural gas resources that sit outside Chevron's core strategic focus.

The joint venture structure with TGNR (primarily owned by Tokyo Gas) is particularly noteworthy. Tokyo Gas gains direct upstream exposure to North American natural gas supply - a strategic priority for many Asian utilities seeking resource security. Meanwhile, Chevron maintains meaningful exposure through retained interests while transferring operational responsibility and the majority of development capital requirements.

The $450 million capital carry is especially significant as it funds future development without Chevron bearing the full cost burden. This structure has become increasingly common for major energy companies optimizing their shale portfolios - allowing continued participation in resource development while freeing capital for deployment in higher-return or more strategic opportunities.

The transaction's timing aligns with evolving natural gas market dynamics. Rather than doubling down on domestic natural gas production or exiting completely, Chevron has found a middle path that reduces capital intensity while maintaining optionality. The retained overriding royalty interest provides additional upside if natural gas prices strengthen, while the working interest ensures Chevron maintains strategic input on development decisions.

HOUSTON--(BUSINESS WIRE)-- Chevron U.S.A. Inc., a subsidiary of Chevron Corporation (“Chevron”) (NYSE: CVX), announced that it has closed on a transaction to sell a 70% interest in its East Texas gas assets to an affiliate of TG Natural Resources LLC (“TGNR”), a company indirectly owned by Tokyo Gas Co., Ltd. (“Tokyo Gas”) and Castleton Commodities International LLC (“CCI”), for $525 million, with $75 million paid in cash and $450 million as a capital carry to fund Haynesville development. Chevron will retain a 30% non-operated working interest in a joint venture with TGNR and an overriding royalty interest in the assets. Tokyo Gas and CCI own an approximate 93% and 7% interest in TGNR, respectively.

The transaction is anticipated to generate over $1.2 billion in value to Chevron at current Henry Hub prices through the multi-year capital carry, retained working interest, and overriding royalty interest. Chevron expects to maintain future upside through the joint venture structure while accelerating development of a non-core asset through a capital efficient approach.

This transaction supports Chevron’s previously announced plans to divest $10-15 billion of assets by 2028 in order to optimize its global energy portfolio.

Chevron is one of the world’s leading integrated energy companies. We believe affordable, reliable and ever-cleaner energy is essential to enabling human progress. Chevron produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance our business and the industry. We aim to grow our oil and gas business, lower the carbon intensity of our operations and grow new businesses in renewable fuels, carbon capture and offsets, hydrogen, power generation for data centers, and emerging technologies. More information about Chevron is available at www.chevron.com.

As used in this news release, the term “Chevron” and such terms as “the company,” “the corporation,” “our,” “we,” “us” and “its” may refer to Chevron Corporation, one or more of its consolidated subsidiaries, or to all of them taken as a whole. All of these terms are used for convenience only and are not intended as a precise description of any of the separate companies, each of which manages its own affairs.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This news release contains forward-looking statements relating to Chevron’s operations, assets, and strategy that are based on management’s current expectations, estimates, and projections about the petroleum, chemicals, and other energy-related industries. Words or phrases such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “advances,” “commits,” “drives,” “aims,” “forecasts,” “projects,” “believes,” “approaches,” “seeks,” “schedules,” “estimates,” “positions,” “pursues,” “progress,” “design,” “enable,” “may,” “can,” “could,” “should,” “will,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on track,” “trajectory,” “goals,” “objectives,” “strategies,” “opportunities,” “poised,” “potential,” “ambitions,” “future,” “aspires” and similar expressions, and variations or negatives of these words, are intended to identify such forward-looking statements, but not all forward-looking statements include such words. These statements are not guarantees of future performance and are subject to numerous risks, uncertainties and other factors, many of which are beyond the company’s control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude oil and natural gas prices and demand for the company’s products, and production curtailments due to market conditions; crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries and other producing countries; technological advancements; changes to government policies in the countries in which the company operates; public health crises, such as pandemics and epidemics, and any related government policies and actions; disruptions in the company’s global supply chain, including supply chain constraints and escalation of the cost of goods and services; changing economic, regulatory and political environments in the various countries in which the company operates; general domestic and international economic, market and political conditions, including the military conflict between Russia and Ukraine, the conflict in the Middle East and the global response to these hostilities; changing refining, marketing and chemicals margins; the company’s ability to realize anticipated cost savings and efficiencies associated with enterprise structural cost reduction initiatives; actions of competitors or regulators; timing of exploration expenses; changes in projected future cash flows; timing of crude oil liftings; uncertainties about the estimated quantities of crude oil, natural gas liquids and natural gas reserves; the competitiveness of alternate-energy sources or product substitutes; pace and scale of the development of large carbon capture and offset markets; the results of operations and financial condition of the company’s suppliers, vendors, partners and equity affiliates; the inability or failure of the company’s joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude oil and natural gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company’s operations due to war, accidents, political events, civil unrest, severe weather, cyber threats, terrorist acts, or other natural or human causes beyond the company’s control; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant operational, investment or product changes undertaken or required by existing or future environmental statutes and regulations, including international agreements and national or regional legislation and regulatory measures related to greenhouse gas emissions and climate change; the potential liability resulting from pending or future litigation; the risk that regulatory approvals and clearances related to the Hess Corporation (Hess) transaction are not obtained or are not obtained in a timely manner or are obtained subject to conditions that are not anticipated by the company and Hess; potential delays in consummating the Hess transaction, including as a result of the ongoing arbitration proceedings regarding preemptive rights in the Stabroek Block joint operating agreement; risks that such ongoing arbitration is not satisfactorily resolved and the potential transaction fails to be consummated; uncertainties as to whether the potential transaction, if consummated, will achieve its anticipated economic benefits, including as a result of risks associated with third party contracts containing material consent, anti-assignment, transfer or other provisions that may be related to the potential transaction that are not waived or otherwise satisfactorily resolved; the company’s ability to integrate Hess’ operations in a successful manner and in the expected time period; the possibility that any of the anticipated benefits and projected synergies of the potential transaction will not be realized or will not be realized within the expected time period; the company’s future acquisitions or dispositions of assets or shares or the delay or failure of such transactions to close based on required closing conditions; the potential for gains and losses from asset dispositions or impairments; government mandated sales, divestitures, recapitalizations, taxes and tax audits, tariffs, sanctions, changes in fiscal terms or restrictions on scope of company operations; foreign currency movements compared with the U.S. dollar; higher inflation and related impacts; material reductions in corporate liquidity and access to debt markets; changes to the company’s capital allocation strategies; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; the company’s ability to identify and mitigate the risks and hazards inherent in operating in the global energy industry; and the factors set forth under the heading “Risk Factors” on pages 20 through 27 of the company’s 2024 Annual Report on Form 10-K and in subsequent filings with the U.S. Securities and Exchange Commission. Other unpredictable or unknown factors not discussed in this news release could also have material adverse effects on forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250331461463/en/

Media Contact

Paula Beasley

paula.beasley@chevron.com

281.728.4426

Source: Chevron Corporation

FAQ

How much did Chevron (CVX) sell its East Texas gas assets for?

Chevron sold a 70% interest for $525 million, comprising $75 million in cash and $450 million as a capital carry for Haynesville development.

What stake will Chevron (CVX) retain in the East Texas gas assets?

Chevron will retain a 30% non-operated working interest and an overriding royalty interest in the joint venture.

How much value is the East Texas asset sale expected to generate for CVX?

The transaction is expected to generate over $1.2 billion in value at current Henry Hub prices through capital carry, retained interest, and royalties.

How does this sale fit into Chevron's (CVX) broader divestment strategy?

This sale supports Chevron's plan to divest $10-15 billion of assets by 2028 to optimize its global energy portfolio.

Who is the buyer of Chevron's (CVX) East Texas gas assets?

TG Natural Resources (TGNR), owned approximately 93% by Tokyo Gas and 7% by Castleton Commodities International.