Chevron, the listed US oil major, has engaged CIBC World Markets to assist with the potential sale of its natural gas storage business, a source close to the situation told mergermarket. The sale information memorandum for the business, which could fetch more than USD 1bn, will be sent out this week, a source with knowledge of the situation said. First round bids will likely be received before Christmas, and the deal should be finalized in early to mid Q1.
Based in northeastern British Columbia, Canada, the Aitken Creek Gas Storage facility has a current working gas capacity of 71Bcf, with expansion potential to approximately 118 Bcf.
The business previously belonged to Unocal, and does not fit with Chevron’s exploration and production focus in Canada, the person familiar said. The facility generates more than USD 100m in EBITDA, the person familiar said, and gas storage assets have been selling for around 10x – 11x EBITDA, according to several industry sources.
The facility will appeal to commodity trading groups, as it provides market information, and is not an annuity asset that would attract a typical midstream master limited partnership (MLP), the person familiar said. A buyer will need a large amount of working capital and a strong tolerance for market risk, the person added.
UBS received the teaser, a source with knowledge of the situation said, and will look at the deal. Goldman Sachs, a major commodity trader, looks at natural gas storage facilities, a second source with knowledge said, but declined to comment further. A Calgary-based attorney noted Goldman Sachs looks at “everything that moves” in Canada, particularly since its oil and gas group opened an office in Calgary.
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