Chevron (CVX) Nears Offshore Oil Contract With Angola & DRC
Chevron Corporation CVX recently finalized a production-sharing agreement with Angola and the Democratic Republic of Congo to operate their shared offshore oil block. The deal could significantly impact the oil and gas industry in the central Africa region.
This agreement comes after nearly 15 years of negotiation between the two countries that have been embroiled in a longstanding dispute over some offshore oil blocks controlled by Angola but claimed by Congo as its own.
According to oil minister Didier Budimbu Ntubuanga, Sonangol, Angola's state-owned oil company, will write off a $200 million debt owed to it by Congolese state oil company, Sonahydroc. He also added that oil production from the block may begin as early as two years after a contract is signed.
The production-sharing agreement is seen as a significant step toward resolving the dispute between the two nations. It also marks a milestone for Chevron. The company will be able to expand its operations in the central Africa region and tap into the vast oil and gas reserves in the offshore block. However, the potential rewards come with significant risks, as the region is known for its political instability and security concerns.
While Angola is the second-largest producer of oil in Africa, the Democratic Republic of Congo is the fifth largest. The two countries have been involved in a territorial dispute over the offshore oil blocks for years, which hindered their ability to tap into the region’s vast oil and gas reserves.
In conclusion, Chevron's production-sharing agreement with Angola and the Democratic Republic of Congo is a significant step toward developing Africa’s oil and gas industry. The contract is expected to unlock the offshore blocks’ potential and significantly boost the countries’ economies. However, CVX will have to navigate the region's complex political and security landscape to ensure success.
Zacks Rank and Key Picks
Chevron, a leading integrated energy company with operations worldwide, generates approximately $95 billion in annual revenues and produces more than 3 million barrels of oil equivalent per day.
Currently, CVX carries a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at some better-ranked stocks like Par Pacific PARR, sporting a Zacks Rank #1 (Strong Buy), and Marathon Petroleum MPC and Ranger Energy Services RNGR, each holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Par Pacific is worth approximately $1.63 billion. Its shares have increased 82.1% in the past year.
The company manages and maintains interests in energy and infrastructure businesses. Par Pacific’s operating segment consists of refining, retail and logistics.
Marathon Petroleum is valued at around $58.02 billion. It delivered an average earnings surprise of 20.91% for the last four quarters and its current dividend yield is 2.30%.
The company currently has a forward P/E ratio of 6.36. In comparison, its industry has an average forward P/E of 9.10, which means MPC is trading at a discount to the group.
Ranger Energy Services is valued at around $242.99 million. In the past year, its shares have gained 16.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.
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