Chevron Corporation CVX is likely to face tighter emissions barriers at its Wheatstone LNG project, located in Western Australia, depending on the latest environmental inspection by the state government.
The government approached the Western Australian Environmental Protection Authority (EPA), which will conduct an investigation to check if the company is faring well in terms of environment responsibility, since it witnessed a waiver of the Clean Energy Act in 2012. Before Chevron received the waiver, the project was given the carbon dioxide emissions' offset limit of 2.6 million tons per year. Following the repeal of the clean energy act in 2012, the EPA is expected to probe the emission in the Wheatstone project and find out whether it is within the permissible limits. Then the environmental regulatory body will provide the government with a report, slated to cover advice and instructions in case the project needs an environmental practice upgrade.
Although the company believes that it has met all the requirements so far, a negative report can affect the company's operations. Following the initial Wheatstone project approval, the company had committed to an A$13 million environmental offsets package. It has 64.1% operating interests in the $34 billion Wheatstone Project. Overall, the company has 80.2% interest in the offshore licenses containing the Wheatstone and Iago fields.
About the Company
San Ramon, CA-based Chevron is one of the largest publicly traded oil and gas entities in the world as per proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products plus manufacturing of chemicals and other energy-related businesses. The company divides its operations into two main segments: Upstream and Downstream.
Owing to Chevron's focus on well planning and execution, the company continues to reduce its operating costs with underlying expenses, down almost 5% year to date compared with the figures recorded in 2016. Cash capital expenditures for the first nine months of the year also declined 30%. However, we remain worried about the headwinds looming large on Chevron's U.S. production. The company's exposure to production in the vulnerable and violence-prone regions in Nigeria poses an additional risk.
Zacks Rank and Stocks to Consider
Chevron has a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and energy sector are Cabot Oil & Gas Corporation COG, Royal Dutch Shell plc RDS.A and Delek US Holdings, Inc. DK. Both Cabot and Shell sport a Zacks Rank #1 (Strong Buy) while Delek has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based Cabot is an independent energy company. Its sales for the fourth quarter of 2017 are expected to surge 37.2% year over year. Earnings for 2017 are likely to skyrocket 357.1%.
Based in The Hague, The Netherlands, Shell is an integrated energy company. Its earnings for 2017 are projected to soar 102.2% year over year. The company pulled off a positive earnings surprise of 18.1% in the third quarter of 2017.
Brentwood, TN-based Delek is an integrated energy company. Its sales for fourth-quarter 2017 are anticipated to increase 95.7% year over year. The company delivered a positive earnings surprise of 19.1% in the third quarter of 2017.
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