From the Houston Business Journal
Chevron Corp.’s (NYSE: CVX) $33 billion acquisition of The Woodlands-based Anadarko Petroleum Corp. (NYSE: APC) precedes a spike and acceleration in Chevron’s planned divestments.
First, Chevron is moving up the date by which it plans to sell about $2 billion in assets outside the U.S., many of which had already been announced, said Mike Wirth, Chevron’s CEO and chairman. Those are now set to complete by the end of 2019, a year earlier than previously expected, Wirth said. He was speaking on a conference call with investors the morning of April 12, shortly after the Anadarko acquisition was announced.
Then the company will dwarf that action with an additional $15 billion to $20 billion in divestments from 2020 to 2022, Wirth said.
It’s all part of Chevron’s effort to high-grade its asset base, making sure it’s investing only in the best possible opportunities, Wirth said.
The investment aspect isn’t being overlooked either. The company plans to accelerate investment into Anadarko’s Permian acreage, Wirth said.
“I’ve got to tell you, this is really in the sweet spot,” Wirth said. “It’s not about getting bigger in the Permian, it’s about getting better in the Permian.”
The increased spending in the Permian is meant to be more than offset by reductions due to the divestments and other sources, Wirth said. That will result in a net reduction of $1 billion in annual capital spending, which pairs with the $1 billion in cost reductions as the company cuts away overlap after the deal closes.
Cost reductions in a deal like this almost always means layoffs for employees in roles that overlap between the two companies, but specific details have not been released yet. In addition, Wirth said the company would find further efficiency in the Chevron side of the business beyond the overlap specific to the deal.
“The combination of asset sales and integration of Anadarko makes this the right time to further lean out our organization,” Wirth said on the call.
The Anadarko deal has an enterprise value of $50 billion.
