26 August 2014, News Wires – US supermajor Chevron has been searching for up to $1.5 billion of equity investment to help develop its Duvernay shale assets in Canada and has contacted a number of potential investors, according to a report.
Chevron holds about 330,000 net acres (1335 square km) in exploration leases for the Duvernay shale, about 124 miles north-west of Edmonton, Alberta.
The California-based company sent an offering memorandum to potential investors over the summer, Reuters reported.
Because oil and gas developments take many years to generate a return for their investors, Chevron was looking for an equity investor with a long-term investment horizon, sources told the news wire.
A representative for Chevron declined to comment to Reuters.
Chevron announced in October that its initial exploration of the Kaybob area of the Duvernay shall formation was complete. At the time, the company said the next step was transitioning to a two-rig drilling programme to optimise well and completion design.
A potential equity injection would help Chevron diffuse the development risk for the next phase of the project. Chevron commenced an exploration programme in the Duvernay in 2011 and, as of this month, has drilled 15 wells, completed 13 and tied in 10 wells to existing third-party processing facilities.
Some private equity firms had looked at the opportunity to provide an equity investment into the Duvernay project, but may not ultimately partner with Chevron because of the long investment horizon, according to the people familiar with the matter.
Chevron has recently bulked up its acreage in the Duvernay by 20%. In August, the company purchased the interests of Alta Energy Luxembourg, which had nearly 68,000 acres. New York-based private equity firm Blackstone Group was an investor in Alta Energy.
Other lease owners in the Duvernay shale formation include Penn West Petroleum, Shell and Athabasca Oil.