Chevron Buys Prospect Off Australia Coast - Analyst Blog


Chevron Asia Pacific Exploration and Production Company, an Australian subsidiary of the U.S. energy behemoth, Chevron Corporation ( CVX ), has acquired full operating interest in two blocks located in the deepwater Bight Basin, 275 miles west of Port Lincoln, off the coast of South Australia.

The offshore blocks S12-2 and S12-3 are spread over 8 million acres. The acquisition is expected to add value to the company's portfolio, with more exploration opportunities in Australia. The move is in line with the integrated supermajor's plans of expanding its asset base.

San Ramon, CA-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 energy-related businesses.

However, Chevron's earnings do not look pretty. Last quarter, the company failed to beat the Zacks Consensus Estimate. We expect this negative trend to continue when the company reports its third quarter earnings on Nov 1.

Earlier this month, the company released a pre-earnings update which supports our view. Per the interim update, Chevron expects third quarter earnings to deteriorate from the previous quarter. In the upstream activities, the update is slightly bullish with oil production expected to be more the previous quarter. On the flip side, the downstream sector outlook is negative as the company expects substantially lower operating results than the last quarter.

Chevron currently holds a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.

However, not all stocks in the energy sector have such gloomy outlook. One can consider Stone Energy Corp. ( SGY ), Seadrill Partners LLC ( SDLP ) and Linn Energy, LLC ( LINE ) 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.

CHEVRON CORP (CVX): Free Stock Analysis Report

LINN ENERGY LLC (LINE): Free Stock Analysis Report

SEADRILL PTNRS (SDLP): Free Stock Analysis Report

STONE ENERGY CP (SGY): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CVX , LINE , SDLP , SGY

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