Chevron Mauritania Exploration Limited, a fully owned affiliate of U.S. energy giant Chevron Corp. (CVX), has entered into a deal with upstream energy player Kosmos Energy Ltd. (KOS).
Per the agreement, Chevron subsidiary will acquire a 30% non-operated working interest in Blocks C8, C12 and C13 located off the coast of Mauritania. The deal is however dependent on the authorization of the country’s government. Following the completion of the transaction, Kosmos Energy will have 60% ownership in the three blocks and will stay as the operator. The remaining 10% interest will be under the possession of the country’s national oil company Société Mauritanienne des Hydrocarbures et de Patrimoine Minier as before.
The three blocks are situated below water at a depth of 5,249−9,842 feet where it is spread over an area of 6.6 million gross acres.
Investors should note that Chevron with its 30% interest in the three blocks hopes to be the operator if there is any commercial discovery during exploration of the area.
Following the closure of the deal, Chevron will expand its presence in West Africa.
San Ramon, CA-based Chevron is a publicly traded oil and gas company, 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.
With crude price remaining soft since last June, we remain concerned about the company’s prospects as Chevron derives the majority of its income from upstream operations.
Chevron currently carries a Zacks Rank #5 (Strong Sell), implying that the stock will significantly underperform the broader U.S. equity market over the next one to three months.
Meanwhile, better-ranked players in the energy sector include InterOil Corp. (IOC) and World Fuel Services Corp. (INT). Both firms sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment