Energy conglomerates Chevron Corporation (CVX) and Royal Dutch Shell plc (RDS.A) have agreed to swap their stakes in certain projects in Australia.
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 long run.
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.
CHEVRON CORP (CVX): Free Stock Analysis Report
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report
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