Chevron Corp. is serious about shopping for Phillips 66’s stake in a chemical substances three way partnership that activist Elliott Funding Administration LP is pushing the oil refiner to exit, in line with folks accustomed to the matter.
Chevron is trying to enhance publicity to petrochemicals on the proper worth and will goal its Chevron Phillips Chemical Co. JV ought to Phillips be open to it, mentioned the folks, who requested to not be named as a result of the issues are personal.
Each Chevron and Phillips 66 have a right-of-first-refusal over one another’s stakes, in line with regulatory filings. Which means in the event that they want to promote, they have to first supply the deal to the opposite companion.
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Spokespeople for Chevron and Phillips 66 declined to remark for this text.
Chevron has been serious about shopping for out the stake for a while, the folks added. No talks are below manner and it’s unclear whether or not Phillips 66 is amenable to parting with the stake or what it may very well be valued at.
Elliott, the hedge fund that went public with its plan for modifications at Phillips 66 earlier this month, mentioned in its supplies that the stake may very well be value about about $15 billion in a possible sale. However that valuation may fluctuate significantly relying on the outlook for chemical margins, that are at present close to multi-year lows.
Elliott earmarked the refiner’s 50% holding in CPChem as an asset that needs to be bought as a part of a push to focus Phillips 66 on its core fuel-making enterprise.
“This enterprise would seemingly appeal to vital curiosity from the prevailing JV companion or one other purchaser,” Elliott mentioned in an investor presentation this month titled “Streamline66.”
Chevron Chief Govt Officer Mike Wirth highlighted chemical substances as having “actually strong demand development” attributable to extra folks getting into the center class globally and a better want for energy-efficient, light-weight plastics in airplanes and autos in an interview with Bloomberg TV on Feb. 5.
“Demand for petrochemicals will likely be sturdy,” he mentioned. “That’s one other sector we’d be serious about.”
Chevron and Phillips 66 established the CPChem three way partnership in 2000 as they mixed two mid-size chemical substances corporations. After constructing highly-profitably crops within the Center East and alongside the US Gulf Coast, it grew to turn into the world’s Thirty second-largest chemical firm by income in 2023, in line with ICIS, an trade advisor and information supplier.
CPChem additionally has a number of development tasks together with an $8.5 billion polymers facility in Orange, Texas, and a $6 billion complicated in Qatar. Each will use low-cost ethane as feedstock, placing them at a aggressive benefit to crops in Europe and Asia that use more-expensive naphtha.
Requested particularly about future acquisitions, Wirth advised Bloomberg TV that he’s centered on closing the $53 billion buy of Hess Corp. later this yr.
“We’ve received a terrific place at this time so we don’t must do something,” he mentioned. “We might solely do one thing at this time if it actually match for our firm, if the worth had been proper and it might create worth for shareholders.”
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