Yesterday, a regional unit Chevron Corp. (CVX) announced the discovery of two new offshore natural gas sites (Clio-2 and the Kentish Knock-1) in Western Australia’s Carnarvon Basin. The discoveries build on the integrated energy giant’s leading position in this hydrocarbon-rich area.

Drilled to a total depth of 4,405 meters, the Clio-2 well encountered 115 meters of net gas pay. The find well is situated in the WA-205-P permit area, 150 kilometers off the coast of Western Australia and in 990 meters of water. Chevron Australia has a 67% operated interest in the prospect.

The second find, the Kentish Knock-1 well, was drilled to a total depth of 2,500 meters and revealed approximately 34 meters of net gas pay. It is located in the WA-365-P permit area, roughly 300 kilometers from the Western Australian coastline and in 1,200 meters of water. Chevron Australia holds a 50% interest in this field.

Royal Dutch Shell Plc (RDS.A) holds the remaining interest in both sites through its Australian subsidiary.

We believe that the latest exploration success will boost Chevron’s growth prospects in Australia by adding to its already significant gas interests in the country (through majority holdings in the Gorgon and Wheatstone natural gas developments).

San Ramon, California-based Chevron is the fourth-largest publicly traded oil and gas company in the world, 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.

We currently rate Chevron shares as Outperform.

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