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Chevron sells $2 billion Colorado pipeline assets, sources claim

People familiar with the matter say that Chevron will sell a collection pipeline assets located in the Denver-Julesburg Shale Basin, which are expected to fetch over $2 billion.

Bank of America's investment bankers have been soliciting interest in the midstream infrastructure in recent weeks. The sources asked to remain anonymous because the discussions are private.

Some people said that the assets collectively generate about $200 million in earnings before interest taxes, depreciation, and amortization. Chevron could expect to receive upwards of $ 2 billion based on similar asset sales.

The people warned that a sale was not guaranteed and Chevron may end up keeping some or all assets.

Chevron has not responded to our request for comment. Bank of America declined to comment.

Chevron is a major oil and gas producer in the Denver-Julesburg Basin, which covers Colorado as well as parts of Wyoming. Chevron's $55 billion purchase of Hess after a lengthy legal battle with Exxon Mobil in July was a major win, but the company has struggled to maintain its financial performance and control costs despite an uncertain outlook for oil prices. The company is currently shedding as much as 20% of its workforce globally. Mike Wirth, Chief Executive of the company, said in an analyst call on August 1, that it would be challenging itself to divest those assets which take money from more profitable prospects. The U.S. Midstream sector has seen a robust deal activity, despite the Trump Administration's efforts to ease pipeline construction. Private equity firms are also keen buyers, but many of the deals have been driven by strategic investors who are reengaging with acquisitions following a period focusing on debt reduction. MPLX has agreed to purchase privately-owned Northwind Midstream, for $2.4 billion, and sell assets located in the Rockies region for $1 billion. Plains All American has announced a $1.6billion deal to purchase a stake in EPIC Crude, the company that owns the pipeline.

(source: Reuters)