Chevron (SL) Ltd. - an affiliate of
Chevron Corporation
(
CVX
) - announced its plan of exploring two deepwater blocks, in the
offshore region of African nation - Sierra Leone.
Spanning over acreage of nearly 2,100 square miles, the blocks are
located between 75 miles and 110 miles to the southwest of the
capital city - Freetown. The two blocks - SL-08A and SL-08B - have
been put together to form one concession and are at average water
depths of 4,900 feet to 9,800 feet.
The subsidiary of Chevron - with 55% interest - will act as the
operator of the venture. The domestic units of
Noble Energy
(
NBL
) and Odye Limited controls a respective 30% and 15% stake in the
blocks.
The Sierra Leone National Oil Company has a 15% back-in option in
the project at the final investment decision stage.
Chevron management remains highly upbeat about its contribution in
developing the energy sector of Sierra Leone and stated that this
collaboration will broaden the company's portfolio of assets in
Africa and will pave way for further exploration opportunities. In
early August, Chevron announced plans to develop the Lianzi field -
its first venture in Congo.
San Ramon, California-based Chevron is engaged in oil and gas
exploration and production, refining and marketing of petroleum
products, manufacturing of chemicals, and other energy-related
businesses.
The company - with an impressive business model - exhibits a
pipeline of large, multi-year projects. Additionally, Chevron
possesses one of the healthiest balance sheets among its peers,
which helps it to capitalize on investment opportunities with the
option to make attractive acquisitions.
However, due to its integrated nature, Chevron is particularly
susceptible to the downside risk from any weakness in the global
economy. We are also concerned about business risks associated with
operations in oversea areas, delays and cost overruns in various
projects and the company's high level of capital spending, which
may result in reduced returns going forward.
As such, we see the stock performing in line with the broader
market and maintain our long-term Neutral recommendation. Chevron,
currently retains a Zacks #3 Rank (short-term Hold rating).
CHEVRON CORP (CVX): Free Stock Analysis Report
NOBLE ENERGY (NBL): Free Stock Analysis Report
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