Chevron Corporation (CVX) won an exploration license from the Bulgarian government, against a payment of approximately $43 million or €30 million.  Chevron out bid Canadian BNK Petroleum to receive the tender.

Per the terms of the tender, Chevron would look for natural gas in a shale gas field near Novi Pazar in northeastern Bulgaria. Initial valuation suggests that the deposits hold between 300 billion and 1 trillion cubic meters of gas.

Treading on the similar route as many other East European countries, Bulgaria seeks to minimize its dependence on Russian natural gas imports. In this regard, the country is busy exploring its untapped energy resources by collaborating with prominent foreign oil and gas companies. The Bulgarian government will also hold bids for exploration rights in two more shale gas blocks in the same region by June end.

Although the Bulgarian authority remains highly positive about this venture, environmentalists have expressed their concerns about the reliability and safety of the technology used by Chevron in extracting shale gas.

San Ramon, California-based Chevron is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses. The company faces competition from peers such as BP plc (BP) and Exxon Mobil Corporation (XOM).

Given the host of development projects and exploration prospects across the globe, we believe that Chevron will be able to achieve its long-term production growth target of 20% by 2017. The company will be able to boost returns and remain competitive by embarking on aggressive cost reduction initiatives, exiting unprofitable markets and streamlining the organization. Hence, we maintain our Outperform rating on the stock.

 
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