Global integrated energy company Chevron Corp. (CVX) intends to boost its interest in the first stage of the proposed Australia based Wheatstone liquefied natural gas (LNG) project to 80% from 75%. Correspondingly, the stake of the other partners, Apache Corp. (APA) and Kuwait Foreign Petroleum Exploration Co. will be cut to 13% (from 16.2%) and 7% (from 8.8%), respectively.
Wheatstone, located about 124 miles north of Onslow, off Western Australia’s Pilbara coast, is one of Australia’s largest resource projects. Coupled with the other prominent Gorgon Project, this facility will hold the leadership position among natural gas and LNG suppliers in the Asia-Pacific belt.
Chevron, which acts as the operator of the venture, targets to expand Wheatstone’s start-up capacity to 8.9 million tones of LNG per annum (mtpa) from 8.6 mtpa. The company expects to achieve the increased level of production from two processing units. The project is expected to be completed by 2016.
Australian subsidiaries of Apache and Kuwait Foreign Petroleum Exploration bought stakes in the project in return for Chevron’s approval for their gas supplies from Julimar and Brunello fields into the Wheatstone processing units.
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.
We believe that Chevron possesses a rich variety of oil and gas development projects across the globe. With an impressive business model, emphasis on upstreamportfolio and a healthy balance sheet, the company will be able to deliver superior performances in the coming months.
However, Chevron remains particularly susceptible to continued weakness in the global economy and international business risks. As such, we see the stock performing in line with the broader market and maintain our long-term Neutral recommendation.
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