Chevron and TPAO Join Forces – Analyst Blog

Chevron Corporation (CVX) through its Turkish subsidiary signed a Joint Operation Agreement with Türkiye Petrolleri Anonim Ortaklığı (“TPAO”), Turkey’s state oil company. As per the deal, Chevron will explore the western end of the Black Sea under the License 3921.

 

The exploration site is an 8,700 square mile block and is located 220 miles northwest to the capital city Ankara. Both Chevron and TPAO will hold 50% working interest in the deal. However, during the initial phase, TPAO will act as the operator of the exploration well.

 

With the success of the first drilled well, 3D seismic will be acquired and TPAO plans to drill another exploratory well by 2012. In the later stage of development, Chevron will take over as the operator of the project.

 

Chevron’s collaboration with the Turkish oil company emphasizes its unrelenting efforts for a global expansion. The company is taking up every opportunity to set foot into the extremely prospective new basins across the globe. In the first week of September, Chevron tied up with the Liberian government for an exploration program.

 

California-based Chevron Corporation is one of the largest publicly traded oil and gas companies in the world. With a bundle of new development projects the company will be able to sustain its long-term growth momentum. We also believe that Chevron’s upgraded technical support and long-time deepwater exploration knowledge will aid in these drilling ventures.

 

However, considering the company’s exposure to the volatile oil and gas prices and international business risks, we remain cautious on the stock in the long run, as reflected in our Neutral rating.

 

We have a Zacks Rank of #3 (short-term Hold recommendation) on the shares, implying that the stock will perform in line with the broader equity market over the next one to three months.