By Ross Kelly 

SYDNEY-- Chevron Corp. plans to sell its stake in an Australian oil-refining business for about $3.60 billion, as the U.S. oil company sheds assets to buffer its balance sheet from tumbling oil prices.

Chevron said Friday it entered into an underwriting agreement to sell its 50% interest in Caltex Australia Ltd., which owns an oil refinery in Brisbane and around 1,800 gas stations spread across the country.

Goldman Sachs is underwriting the deal and has set a floor price on the stake sale of 34.20 Australian dollars (US$26.65) per share, according to a person familiar with the matter. The floor price represents a 9.7% discount to Caltex's closing price on Friday of A$37.88.

Companies trying to sell large blocks of shares on the stock market typically offer a discount to get the trade away.

The biggest U.S. oil company behind Exxon Mobil Corp. in terms of production said it intended to sell its Caltex shares to a range of institutional investors. At the close of trade in Sydney on Friday, Caltex had a market capitalization of A$10.22 billion.

"This transaction reflects Chevron's commitment to regularly review our portfolio and generate cash to support our long-term priorities," Michael Wirth, executive vice president of the company's downstream and chemicals business, said in a statement. "It is aligned with our previously announced asset sales commitment."

Earlier this month, Chevron raised its target for asset sale proceeds to US$15 billion between 2014 and 2017, up from its previous guidance of US$10 billion.

The San Ramon, Calif., company in January reported a 30% year-over-year slide in profit for the last three months of 2014 to $3.5 billion, its lowest since the 2009 recession. Chevron said at the time it would trim spending and stop buying back its shares as the collapse in oil prices wiped billions of dollars from its cash flow.

Caltex Australia shares have more than tripled in the past five years, rallying 74% in the past 12 months alone, as the company moved away from volatile fuel refining and focused more on its more lucrative fuel marketing business.

Last year, Caltex closed its Kurnell refinery in Sydney and converted it into a fuel import terminal. It still operates the Lytton refinery in Brisbane.

Write to Ross Kelly at ross.kelly@wsj.com

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