Chevron Nigeria Limited - a subsidiary of the U.S. energy
) - is planning to divest its ownership in three shallow water
oil blocks, off the country's shore.
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Chevron holds a 40% interest in blocks - Oil Mining Leases (OML)
52, OML 53 and OML 55. The remaining 60% is owned by Nigerian
National Petroleum Corp. ("NNPC") - the state oil corporation of
This divesture would be in addition to Chevron Nigeria's planned
sale of 40% interest in OML 83 and OML 85 announced last week.
Oil and gas reserves of the total 5 blocks are expected to be
more than 250 million barrels of oil and over 3.5 billion cubic
feet of gas.
In Nigeria, oil theft and lack of support from local people have
increased the cost of operation. As a result, many oil majors
Royal Dutch Shell plc
) have sold their onshore and offshore assets in Nigeria in the
last few years.
Chevron, in cooperation with NNPC, is working in 13 shallow water
blocks in Nigeria. Chevron Nigeria had a daily production of
roughly 238,000 net barrels of crude oil and 165 million cubic
feet of natural gas in 2012.
The oil major's current oil and gas development project pipeline
- targeting volume growth of 25% by 2017 - is among the best in
However, Chevron's production growth profile depends on the
timely development of upstream projects, almost all of which have
inherent risk factors. Time and cost overruns on these programs
may lead to lower returns going forward.
Chevron currently retains a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next 1 to 3 months.