Chevron Canada Limited, a subsidiary of the U.S. energy
), has completed the initial phase of exploration in the Kaybob
area of the liquid-enriched Duvernay play, in Alberta, Canada.
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The initial exploration drilling program comprises 12 wells of
which five have already been completed and have entered
production. Four of the remaining wells are near completion,
waiting to come online. Liquid component for the completed wells
makes up around 30-70% of the total. Initial production rates are
7.5 million cubic feet per day of natural gas and 1,300 barrels
per day of condensate.
This exploration activity adds value to the company's portfolio.
Positive results of the drilling activities, exceeding company
expectations, reflect growth potential for Chevron in Canada. Per
management, short-term plans include a shift to a two-rig
drilling program to enhance the capacity of the wells and
full-field spacing requirements.
The total holding of Chevron in the Duvernay play stands at about
325,000 net acres post acquisition from Alta Energy Luxembourg
S.à.r.l. and affiliates, earlier this year.
San Ramon, Calif.-based Chevron is one of the largest publicly
traded oil and gas companies in the world. It is engaged in oil
and gas exploration and production, refining and marketing of
petroleum products, manufacturing of chemicals and other
Chevron is expected to report its third quarter earnings on Nov
1, and we are bearish on the results. Last quarter, the company
failed to beat the Zacks Consensus Estimate and we expect this
negative trend to continue into this quarter. The
pre-earnings update, which the company released earlier this
month, also supports our view. Per the interim update, Chevron
expects third quarter earnings to deteriorate from the previous
Chevron currently holds a Zacks Rank #3 (Hold), implying that it
is expected to perform in line with the broader U.S. equity
market over the next one to three months.
However, one can consider other stocks in the energy sector such
Vermilion Energy Inc
Baytex Energy Corp.
Linn Energy, LLC
) as good investment options. These stocks currently hold a Zacks
Rank #1 (Strong Buy) and are expected to significantly outperform
the market in the near term.