SAN FRANCISCO -- Chevron Corp., the No. 4 U.S. oil company, announced Wednesday that it had agreed to sell oil and natural-gas fields in Utah to Shenandoah Energy Inc. for a stake in Shenandoah and an undisclosed amount of cash.
Closely held Shenandoah also agreed to supply Chevron's Salt Lake refinery with oil. As part of the transaction, Shenandoah will acquire the stock of the company which formed it, the closely held Chandler Co. The transaction is expected to close by Nov. 30.Chevron will combine its assets in Utah's Uinta Basin with Shenandoah's. Shenandoah's assets are located in the Rocky Mountains, primarily in Uinta and other basins in Colorado. Shenandoah has daily production of 2,636 barrels of oil and 8.9 million cubic feet of gas. Chevron produces 2,280 barrels of oil and 5.9 million feet of natural gas a day in the region.
Chevron said it agreed to the transaction because it can keep a stake in the fields while using money from the sale to develop more profitable projects elsewhere. The San Francisco-based company said its 36 employees in the Uinta Basin will compete for jobs with Shenandoah employees or be reassigned to other Chevron posts.
After the transaction, Shenandoah, which will be based in Denver, will have proven reserves of 122.7 billion cubic feet of gas and 19.3 million barrels of oil, with an estimated reserve life of about 25 years.