ChevronTexaco to sell $6B in assets
By Elizabeth Douglass
Los Angeles Times
NEW YORK — ChevronTexaco Corp. said yesterday it would sell up to $6 billion in assets, including lagging oil fields, refineries and half its company-operated gas stations in the United States to streamline the company and boost returns.
Associated Press
A Hawai'i ChevronTexaco spokesman could not be reached last night to comment on whether the sale would include ChevronTexaco's Kapolei refinery or any stations in the state.
ChevronTexaco Corp. yesterday said its second-quarter profits quadrupled, partly because of higher energy prices. These increases have meant higher gas prices nationwide.
The company sketched out its divestiture plans after reporting that second-quarter profits had quadrupled to $1.6 billion, or $1.50 per share, helped by high prices for gasoline in California, as well as increased crude oil and natural gas prices.
Chevron's net income for the quarter ended June 30 is up from a profit of $407 million, or 39 cents a share, for last year's second period. Excluding a net special charge of $117 million to write down the value of assets slated for sale, the company said it would have earned $1.61 per share, well above the consensus analyst estimate of $1.52 compiled by Thomson First Call.
Sales rose nearly 16 percent to $29 billion, as average prices for oil and natural gas in some areas soared more than 68 percent over year-ago levels, more than offsetting the effects of a
percent decline in worldwide production in the quarter.
Despite the strong earnings, Wall Street analysts and investors were more interested in Chevron's divestiture plans. The company, formed by the 2001 merger of Chevron Corp. and Texaco Corp., is under merger-related restrictions on asset sales that expire Oct. 9.
With the restrictions about to expire, the company hosted a 90-minute presentation on its intentions at the Waldorf Astoria hotel in New York yesterday. Several analysts complained the presentation was short on details.
"I give them an incomplete grade. It really was more of a teaser," said Fadel Gheit, industry analyst at Fahnestock & Co., who owns the stock and rates it a buy. "I can assure you that they are in much more advanced negotiations (for sales) than we were led to believe."
Jacques Rousseau, an analyst at Friedman Billings Ramsey & Co., said people "are comfortable with what they're doing," but he warned that ChevronTexaco's sell-off would reduce short-term earnings and production, which will remain flat until several major projects begin production.
Such concerns may have contributed to the reaction on the New York Stock Exchange, where the stock price of nation's second-largest oil company fell $1.06 yesterday to close at $71.05, amid an overall downturn in the petroleum sector.
Chairman and Chief Executive David J. O'Reilly said ChevronTexaco has labeled $5 billion to $6 billion in assets as "non-strategic," and would likely sell $1 billion to $2 billion worth in each of the next three years.
The company's retail and marketing business will be "smaller and focused on the U.S. West Coast and Asia," he said. Despite Asia's economic struggles, he said Chevron would stay put, arguing that "at some point there will be an upturn."
