U.S. energy behemoth
) announced the discovery of two new offshore natural gas sites -
Pinhoe-1 and Arnhem-1 - in Western Australia's Carnarvon Basin.
The discoveries, the eighteenth and nineteenth by Chevron off the
Australian coast since mid-2009, builds on the integrated oil and
gas giant's leading position in this hydrocarbon-rich area.
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Drilled to a total depth of 13,396 feet (4,083 meters), the
Pinhoe-1 well encountered 197 feet (60 meters) of net gas pay.
The find is situated in the WA-383-P permit area, approximately
124 miles (200 kilometers) north of Exmouth Plateau area of the
On the other hand, the Arnhem-1 discovery - that lies in the
WA-364-P permit area, roughly 180 miles (290 kilometers) north of
Exmouth - was drilled to a total depth of 9,557 feet (2913
meters). The well came across 149 feet (45.5 meters) of net gas
Chevron Australia has a 50% operated interest in both the
prospects, with the other partner being the subsidiary of
Royal Dutch Shell Plc
). We believe that the latest exploration success will boost
Chevron's growth prospects in Australia by adding to its already
significant gas interests in the country (through majority
holdings in the Gorgon and Wheatstone natural gas developments).
San Ramon, California-based Chevron is one of the largest
publicly traded oil and gas firms in the world, based on proved
reserves. It is engaged in oil and gas exploration and
production, refining and marketing of petroleum products,
manufacturing of chemicals and other energy-related businesses.
Chevron shares currently retain a Zacks #3 Rank, which translates
into a short-term 'Hold' rating. We are also maintaining our
long-term 'Neutral' recommendation on the stock.
Chevron's current oil and gas development project pipeline is
among the best in the industry, boasting large and multi-year
projects. Additionally, the second-largest U.S. oil company by
market value after
) possesses one of the healthiest balance sheets among its peers,
which helps it to capitalize on investment opportunities with the
option to make strategic 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 by the company's high level of
capital spending, which may result in reduced returns going
Considering these factors, we see the stock performing in line
with the broader market.