Royal Dutch Shell plc
) have agreed to swap their stakes in certain projects in
CHEVRON CORP (CVX): Free Stock Analysis Report
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis
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Per the binding agreement signed between the two companies, Chevron
will transfer its 16.7% interest in the East Browse Basin and 20%
holdings in the West Browse Basin, off the Kimberley coast, to
Shell. In return, the latter will hand over its 33.3% stake in the
WA-205-P and WA-42-R blocks in Clio and Acme fields to Chevron
along with a cash payment of $450 million.
With the completion of the transaction - that is awaiting
governmental approval and customary registration - Shell will
control 35% interest in the West Browse titles and 25% interest in
the East Browse titles. Following the increase in stake in the
Browse liquefied natural gas (LNG) project, Shell will move a step
ahead with the development strategy of floating LNG.
Meanwhile, Chevron will also gain 100% ownership of the WA-205-P
and WA-42-R concessions in the Carnarvon Basin, thereby expanding
its Wheatstone area resource base in Western Australia.
Located about 7.5 miles west of Onslow, off Western Australia's
Pilbara coast, Wheatstone is one of the country's most ambitious
resource projects. The venture is proposed to be built with an
annual output capacity of 25 million metric tons of LNG. The
project is expected to come online by 2016.
Headquartered in California, San Ramon, Chevron is one of the
leading energy companies in the world with an impressive business
model. Its current oil and gas development project pipeline is
among the best in the industry, boasting large, multiyear projects.
Based in Netherlands, Shell owns a strong and diversified portfolio
of global energy businesses that offer attractive long-term growth
opportunities. The group's strong inventory of development projects
and increased capital expenditures should help volume growth in the
Both Chevron and Shell currently hold a Zacks #3 Rank, implying a
short-term Hold rating for a period of one to three months. We also
maintain our long-term Neutral recommendation on the stocks.