Chevron Corp. (CVX) – the second-biggest U.S. oil company – gained an exploration license in Poland to search for natural gas in the country’s southeastern region, in the vicinity of the city of Zamosc.
 
Covering an area of 800 square kilometers, the 5-year concession will allow Chevron’s subsidiary in Poland (Chevron Polska Exploration & Production) to carry out seismic study and exploratory drilling up to 3,500 meters underground, as well as to search for shale gas deposits (which is stored deep in underground rock structures). As per Poland’s environment ministry, the integrated major is only expected to evaluate the complexity of accessing the gas, but not to extract it. Financial details of the agreement were not available.   
 
During the last two years, Poland has granted 30 concessions for unconventional gas deposits prospecting in the country. Energy companies exploring for gas in Poland include ExxonMobil (XOM), Lane Energy, and Marathon Oil Corp. (MRO).
 
We view this news as positive for Chevron, especially considering the importance of unconventional natural gas production (like shale gas) in the long-term energy supply scenario. Earlier this week, ExxonMobil decided to pick up unconventional natural gas producer XTO Energy (XTO) in a $41 billion all-stock deal.
 
San Ramon, California-based Chevron is one of the largest publicly traded oil and gas firm 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 Neutral.
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