Chevron China Energy Company - subsidiary of the U.S. energy
) - entered into two production sharing agreements with China
National Offshore Oil Corporation - parent company of the Chinese
CNOOC LTD ADR (CEO): Free Stock Analysis
CHEVRON CORP (CVX): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
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The contracts are for the exploration of blocks 15/10 and 15/28
located in Xijiang Sag of Pearl River Mouth Basin in the eastern
part of the South China Sea. Together, the blocks cover an area
of about 2,233 square miles in water depth of 50-100 meters.
Per the deals, Chevron will have 100% stake in both the shallow
water blocks, while CNOOC will have the right to share up to 51%
in any commercial discovery. Chevron will operate both the blocks
and will carry out 3D seismic data surveys. The cost of the same
will be borne by Chevron. No other financial term was disclosed.
This deal is a part of the strategic move by Chevron to develop
its business in the Asia Pacific region.
Chevron is currently a Zacks Rank #3 (Hold) stock, implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months. We are also maintaining
our long-term Neutral recommendation on the stock.
The energy giant's current oil and gas development project
pipeline is among the best in the industry, boasting large and
multi-year projects. Additionally, this second-largest U.S. oil
company by market value after
) possesses one of the healthiest balance sheets among its peers
that help it to capitalize on strategic investment opportunities.
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 the company's high level of
capital spending, which may result in reduced returns going