Chevron (CVX) is exploring a sale of pipeline assets in the Denver-Julesburg (DJ) Basin that could fetch over $2B, Reuters reports. CVX acquired the assets as part of the $5B purchase of Noble Energy in 2020 and its buyout of Noble Midstream Partners one year later, according to the report.
Chevron signaled its intention to unload non-core assets following its $53B megadeal for Hess. The major is focusing its investments on the Permian Basin, the Bakken and deepwater exploration, though also has planted a flag in the DJ. After the Noble deal, CVX acquired PDC Energy for $6.3B in 2023, making the company the top oil and gas producer in Colorado. The properties CVX is shopping generate ~$200MM/year in EBITDA, Reuters said.
Chevron owns two assets in the DJ that could be up for grabs. First, CVX owns 10% of Saddlehorn Pipeline via Noble Midstream subsidiary Black Diamond Gathering LLC. According to East Daley Analytics’ Crude Hub Model, Saddlehorn has moved an average of ~279 Mb/d to Cushing since the beginning of 2024, and we project will have stable volumes through 2026 (see figure). Black Diamond Gathering has a split 20% ownership of the pipe with Greenfield Midstream LLC. The remaining Saddlehorn owners include Plains All American (PAA; 40%) and ONEOK (OKE; 40%).
Chevron also owns 335 miles of crude oil gathering lines in the DJ, located just east of Loveland, CO. The gathering system can deliver up to 300 Mb/d and includes storage tanks with 420 MMbbl of capacity. The assets connect to the White Cliffs, Saddlehorn, Grand Mesa, and Pony Express pipelines. CVX also acquired the gathering system from Noble Midstream subsidiary Black Diamond.
An asset sale would represent a unique opportunity for the right owner. For example, Plains has been on the hunt for crude oil assets following the sale of its Canadian NGL portfolio, and could consolidate its ownership in Saddlehorn. Integrating CVX’s gathering system would also increase PAA’s leverage over crude movements to the pipeline. Considering the subdued production outlook for the DJ, the acquisition could enhance system utilization, support revenue stability and provide incremental EBITDA growth. – Alec Gravelle and Garrett Streit Tickers: CVX, OKE, PAA.
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