Chevron Australia Inks Acquisition Deal With Puma Energy

Chevron Australia Downstream Pty Ltd, a wholly-owned affiliate of Chevron Corporation (NYSE:CVX) , signed a conditional share sale agreement to acquire Australia’s Puma Energy Holdings Pty Ltd in an all-stock deal worth $288 million.

Rationale Behind the Deal

Chevron's acquisition deal comes four years after it exited Australia's retail fuel market by selling its stake in Caltex in a $4.62 billion transaction. The transaction will help its Australian business to acquire a stable network of petrol stations and fuel distribution ventures, together with storage and import terminals in the country and provide a base for sustainable earnings growth. Chevron’s executive vice president for Downstream & Chemicals, Mark Nelson, feels that this deal will build on the company’s strong history of partnership in Australia and its global experience in fuels and convenience marketing and supply.

The transaction is expected to close by the second quarter of 2020 and is dependent on pending approvals and customary conditions.

Chevron Corporation is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses. The company’s key assets are focused on the United States, Australia, most of South America, and eastern and central Asia.

What’s In It for Puma Energy?

With this move, Puma Energy will be able to use the proceeds of the sale to pay back its debt, thereby maintain its capital structure policy.

This move is in line with Puma Energy’s efforts to optimise global portfolio and deleverage balance sheet by the end of 2020.

Puma Energy (Australia) Holdings Pty Ltd and its subsidiaries hold assets including a network of company-owned and retailer-owned service stations in Australia, a commercial and industrial fuels business, owned or leased seaboard import terminals and fuel distribution depots.

Puma Energy’s bitumen business in Australia will not be included in this deal and it will continue to invest to boost services to its bitumen buyers.

Zacks Rank & Key Picks

Chevron currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Phillips 66 (NYSE:PSX) , Marathon Petroleum Corp. (NYSE:MPC) and Valero Energy Corp. (NYSE:VLO) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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