Chevron Corp.’s share price rises, to sell a 30% stake in Canada at the price of $1.5 billion to a subsidiary of Kuwait Foreign Petroleum Co.

The second-biggest oil and gas manufacturer in the U.S. – Chevron Corp. announced that it reached an agreement to sell a 30% stake of a Canada-based joint venture at the price of $1.5 billion to a subsidiary of Kuwait Foreign Petroleum Co. The proceeds of the sale are to be used for financing the companys global production projects. The deal is also considered part of the companys strategy for appraisal and development of liquids-rich shale resources in the region.

The President of the North American division of Chevron – Mr. Jeff Shellebarger – sain in the companys statement, which was cited by Bloomberg: “We remain encouraged by the early results of our exploration program.”

According to Chevrons statement, the price of the purchase includes cash and an agreement to contribute to the capital expenses of the venture. A total of 16 exploration wells have been drilled in the area by the company. The deal between the companies is expected to be finalised in November 2014. After the acquisition is finalised, the U.S.-based oil and gas producer will still own a 70%-stake in the joint-venture acreage and will remain its operator.

One of the analysts, who work at RBC Capital Markets – Mr. Peter Hutton commented on the terms of the deal in a note to clients, which was cited by Bloomberg: “It appears to be good price.” Mr. Hutton also said that the sale of the 30% stake is expected to cut Chevrons cash burn, especially considering the fact that the company has been following a plan of making large investments in new development through 2017.

The Canada-based subsidiary of Chevron has exploration leases for about 330 000 net acres (1 335 square km) in the region of the Duvernay shale formation.

Chevron Corp. was 0.51% up to close at $117.71 per share yesterday, marking a one-year change of -0.36%. The company is valued at $223.52 billion. According to CNN Money, the 20 analysts offering 12-month price forecasts for Chevron Corp. have a median target of $140.00, with a high estimate of $157.00 and a low estimate of $120.00. The median estimate represents a +18.94% increase from the last price of $117.71.