Chevron to sell assets worth $6.5 billion to Canadian Natural Resources

(Reuters) -Chevron is selling its assets in Athabasca Oil (OTC:) Sands and Duvernay Shale to Canadian Natural (NYSE:) Resources for $6.5 billion, the oil giant said on Monday as it puts in motion its divestiture plan.

The all-cash transaction, which is expected to close in the fourth quarter, is a part of its strategy to divest $10 billion to $15 billion of assets by 2028.

The assets, located in Alberta, Canada, contributed 84,000 barrels of oil equivalent per day (boepd) of production to Chevron (NYSE:) in 2023.

The Duvernay is one of Canada’s top shale plays and has seen eight deals worth $2.9 billion in the last three years, Wood Mackenzie said in January.

After the deal, Canadian Natural will own 90% of the Athabasca Oil Sands project, while Shell (LON:) owns the rest.

The company said along with the Duvernay assets, it would add 122,500 boepd of its target production in 2025.

It also raised its quarterly dividend by 7% to 56.25 Canadian cents per share, payable in January 2025, with its finance chief Mark Stainthorpe saying the deal will add to cash flow and earnings immediately.

Canadian Natural had a long-term debt of C$9.33 billion as of June 30.

Chevron, meanwhile, is looking to spend more than 75% of its production budget on U.S. shale basins, the Gulf of Mexico, the Eastern Mediterranean, Guyana, Australia and Kazakhstan.

It had recently cleared an FTC review on its $53 billion deal for Hess (NYSE:), but will need to clear a challenge by Exxon (NYSE:) and CNOOC (NYSE:), Hess’s partners in a Guyana joint venture. A three-judge arbitration panel is set to consider the case next May.

Shares of Chevron were up 1% before the bell in a higher oil-price environment.