Chevron exits Caltex Australia in record $4.61b block trade

Angela Macdonald-Smith
March 27, 2015
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Chevron remains one of the biggest overseas investors in Australia.
Chevron remains one of the biggest overseas investors in Australia. Photo: Reuters
US oil major Chevron has decisively taken the long-awaited step to exit Caltex Australia, selling its 50 per cent stake for $4.62 billion in the country’s biggest-ever block trade.
As revealed by Street Talk on Friday afternoon, Chevron, which owned 50 per cent of the fuels marketer and refiner, sold its 135 million shares at $34.20, a 9.7 per cent discount to the closing price on Friday of $37.88.
The sale was underwritten solely by Goldman Sachs, which by 5pm on Friday had already placed more than half the stock with a range of domestic and international investors, at an average price higher than $34.20.

Caltex managing director Julian Segal.
Caltex managing director Julian Segal. Photo: Louie Douvis
The block is the biggest in Australia’s history, leap-frogging Royal Dutch Shell’s $3.3 billion and $3.2 billion trades in 2010 and 2014, respectively. Both trades were to sell down Shell’s position in Woodside Petroleum.
It will also put Goldman Sachs well clear at the top of the equity capital markets league table.
Michael Wirth, executive vice-president of downstream and chemicals at Chevron, said the sale reflected the US major’s commitment to regularly review its portfolio and “generate cash to support our long-term priorities”.
Like other oil majors Chevron has been slimming down its investments in downstream refining and marketing of fuels to focus on exploration and production, typically a higher-margin part of the business.
Early last year, Royal Dutch Shell sold its refining and marketing business in Australia to Swiss commodities trader Vitol, while BP has streamlined its local downstream business with plans to close one of its two refineries.
Speculation about Chevron’s intentions for its stake in Caltex has been increasing in recent months, especially after Shell sold down part of its stake in Woodside Petroleum last year in another large block trade.
Chevron’s announcement earlier this month that it planned to sell an extra $US5 billion ($6.4 billion) of assets revived talk about a potential sell-down for Caltex, whose shares have surged 74 per cent in the past 12 months.
Caltex managing director Julian Segal wasn’t available to comment on Friday evening.
Mark Nelson, president of Chevron’s international products, downstream and chemicals business, said Asia still remained a strategic focus for the major’s downstream business.
Chevron remains one of the biggest overseas investors in Australia, through its $US54 billion Gorgon liquefied natural gas project and its $US29 billion Wheatstone LNG venture, both under construction in Western Australia. It also owns a stake in the Woodside Petroleum-managed North West Shelf venture and is the largest holder of gas resources in the country.
The trademark licensing deal between Chevron and Caltex will live on after the sale, and Chevron said it was committed to seeking long-term business opportunities with Caltex. The US producer said it would continue to ensure reliable supplies of fuel to Caltex to supply its retail and franchise network of service stations.
Goldman offered the Caltex shares through an accelerated book-build from the underwritten floor price of $34.20 a share. The price is a 9.64 per cent discount to the five-day volume-weighted average price.