Chevron in $4.8bn Caltex exit

US oil major Chevron is the latest energy giant to exit its Australian refining and fuel interests.

A Caltex service station in Crows Nest where an attempted abduction of a nurse took place as she walked home from a nearby North Sydney hospital.

US oil major Chevron is the latest energy giant to exit its Australian refining and fuel interests, after late yesterday pushing ahead with a $4.8 billion sale of its 50 per cent holding in Caltex Australia through the biggest block trade in Australian history.

The US oil giant has also quit its $300 million Cooper Basin shale gas exploration joint venture with Beach Energy.

The Caltex shares were being sold to local and international investors through a bookbuild priced at a discount of about 9.7 per cent to the market price and carried out last night through Goldman Sachs, who is the sole underwriter.

Caltex, whose 76 per cent share price rise this financial year has made it the fourth-best performing top 100 stock over the past ­financial year, is expected to be highly sought after. About $2bn of the sale ­is expected to go to index funds that will be required to top up their stake.

It is understood Australian Super took a sizeable holding.

The exit is the latest in a shake-up of the nation’s refining and fuel marketing sector that has seen refineries close, Royal Dutch Shell exit after more than 100 years in the business here and international traders like Vitol and Trafigura take bigger stakes as the nation relies more on imported fuel.

It also marks the end of the US company’s cornerstone shareholding in Caltex that dates back to sharemarket listing of the Australian oil refiner more than four decades ago.

“The Chevron selldown has not been totally unexpected,” said Paul Xiradis, CEO of $10bn fund manager Ausbil. “The underwriters seem to be happy to do the deal, so they would have had some comfort from potential investors — I think it will go off OK.”

Caltex’s recent share surge came as the company successfully completed its complex closure of the Kurnell refinery in Sydney, moving the focus of its business from refining to importing, selling and marketing fuel.

Mr Xiradis said the bookbuild was of interest to Ausbil. “They’re about growing their margins through efficient delivery of those products,” Mr Xiradis said. “The stock has gone up a lot but they have transformed themselves and that’s all part of the ­reason.”

Another attraction was greater potential ability to distribute $1.1bn worth of franking credits now that the US-based Caltex was off the books, he said.

Caltex shares closed at $37.88 yesterday, valuing the company at about $10.2bn. The shares were last night being sold at $34.20.

The sale eclipses the two separate block trades Shell used to ­reduce its stake in Woodside Petroleum. Those were a $3.3bn trade in 2010 and a $3.2bn trade last year.

There has been growing speculation in recent months that Chevron would exit its Caltex stake as it looked to conserve cash in the face of sliding oil prices and cost blowouts in recent years at its now $US54bn ($69bn) Gorgon LNG project in Western Australia.

Last month, the speculation, which was reported in The Australian, increased after Chevron said it would target $US15bn of asset sales over the next two years.

About half the Goldman Sachs-run bookbuild had already been completed by 5pm yesterday. Caltex said Chevron’s exit would not change its determination to stay “the outright leader in transport fuels in Australia.” “There will be no change to our ability to reliably and competitively deliver all our customer’s fuel requirements,” the company said in a statement. “Through Ampol Singapore, Caltex retains its strong supply sourcing capability and Chevron will remain an important supplier.”

The rapid changes in the refining sector have been driven by years of a high Australian dollar driving up refining costs here at the same time as big new low-cost refineries are built in Asia.

As a result, many Australian refineries cannot compete, leading to the recent closure of Sydney’s two refineries, Kurnell and the Shell-owned Clyde.

Chevron’s head of downstream operations, Michael Wirth, said the exit reflected a commitment by the company to regularly review its portfolio.

Chevron president of international products, downstream and chemicals Mark Nelson said the sale did not alter Chevron’s focus on moving the Gorgon and $30bn Wheatstone projects towards start-up.

“Asia-Pacific is a core strategic focus for Chevron’s downstream business and we remain focused on ensuring our operations, portfolio and investments are well positioned to meet the ­region’s growing demand for ­energy,” Mr Nelson said.