Integrated energy firm Chevron Corporation (CVX) has made another important oil discovery in the Gulf of Mexico (GoM). The deepwater find, at its Anchor prospect, is the second by the company in the region, within the span of a year.
The discovery was made through Well No. 2 in the Green Canyon Block 807, which is located about 225 kilometers offshore Louisiana. The discovery well, spudded in Aug 2014, was drilled to a depth of 10,287 meters and found oil in multiple Lower Tertiary Wilcox Sands. Chevron added that the appraisal drilling of the well will commence this year.
Chevron U.S.A. Inc., a subsidiary of Chevron, operates the Anchor prospect with a 55% working interest. Other stake owners in the prospect include Cobalt International Energy, Inc. (CIE) with 20% interest, and Samson Offshore Anchor, LLC and Venari Resources LLC holding 12.5% each.
Management at Chevron added that the Anchor discovery and the previously announced Guadalupe discovery are important finds for the company. Moreover, 2014 marked an important year for the company in terms of drilling ventures as Chevron made over 30 discoveries and added new resources of approximately one billion barrels.
Chevron added that it expects further growth in the GoM with 5 drillships currently operating in the region. Two of these drillships are working on upstream operations. The company’s previously announced Jack/St. Malo and Tubular Bells projects are also likely to contribute to this growth.
However, considering the weakened market dynamics – oversupply in the face of low demand – Chevron may find it difficult to maintain profitability in the upcoming earnings. Estimates moving south further raise concerns.
In keeping with these views, Chevron currently holds a Zacks Rank #5 (Strong Sell).
Better-ranked stocks include Seadrill Partners LLC (SDLP) and QEP Midstream Partners, LP (QEPM), both of which sport a Zacks Rank #1 (Strong Buy).
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