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Chevron to Develop Alder Field - Analyst Blog

Posted
1/14/2014 3:50:00 PM
By: Zacks.com
Referenced Stocks:COP;CVX;TOT;YPF

Chevron North Sea Limited, the U.K. subsidiary of the U.S. energy major Chevron Corporation ( CVX ), has taken a final investment decision to develop the Alder Field in North Sea. The British government has given the nod on the project, which is expected to come online in 2016.

The project is expected to process 14,000 barrels of condensate and 110 million cubic feet of natural gas per day. Located 17 miles from the operating Britannia field, it will be developed using a single subsea well tied to the Britannia platform.  

The high-pressure, high-temperature gas condensate field is located in the Block 15/29a of the U.K. Continental Shelf, at a depth of 492 feet. The field, though discovered in 1975, remained undeveloped due to its complex nature. Thanks to recent technological advancement, development has become possible in the field.

Management finds the development process in tune with the company's production growth strategy and valuable for shareholders as well. With a 73.684% stake in the project, Chevron acts as the operator. The remaining 26.316% is held by ConocoPhillips ( COP ).

Chevron Corp. is one of the largest integrated energy companies in the world and has an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting large, multi-year projects.

However, due to its integrated nature, Chevron is particularly susceptible to 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 forward.

San Ramon, California-based Chevron Corp. currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players in the oil and gas integrated industry like YPF SA ( YPF ) and Total SA ( TOT ). YPF sports a Zacks Rank #1 (Strong Buy) while Total holds a Zacks Rank #2 (Buy).



CONOCOPHILLIPS (COP): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

TOTAL FINA SA (TOT): Free Stock Analysis Report

YPF SA D CV ADR (YPF): Free Stock Analysis Report

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