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Chevron Nigeria Limited – a subsidiary of the U.S. energy behemoth, Chevron Corporation (CVX - Analyst Report) – is planning to divest its ownership in two shallow water oil blocks, off the country’s shore.

Chevron Nigeria holds a 40% interest in the blocks, Oil Mining Leases (OML) 83 and OML 85. The remaining 60% is owned by Nigerian National Petroleum Corp. (NNPC), which is a state oil corporation of Nigeria. Although Chevron has not disclosed anything about the expected oil and gas reserves of the blocks, but according to industry sources, OML 83 and OML 85 have a capacity of 200 million barrels of oil.

In Nigeria, oil theft and lack of support from the local people have led to increased cost of operation. As a result, many oil majors have sold their onshore and offshore assets there in the last few years.

Chevron Nigeria, in cooperation with NNPC, is working in 13 shallow water blocks in Nigeria. Chevron Nigeria had a daily production of roughly 238,000 net barrels of crude oil and 165 million cubic feet of natural gas in 2012.

San Ramon, Calif.-based Chevron is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. Chevron is operating in Nigeria through its affiliate, Chevron Nigeria, which is also the third-major oil producer there after integrated energy firms like Exxon Mobil Corporation (XOM - Analyst Report) and Royal Dutch Shell plc (RDS.A - Analyst Report).

Chevron’s current oil and gas development project pipeline is among the best in the industry – targeting volume growth of 25% by 2017.

However, Chevron conducts operations in many countries. As such, the company is exposed to risks associated with doing business abroad. Such risks include embargoes and/or expropriation of assets, exchange rate risks, terrorism and political/civil sentiment, etc.

Chevron currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.

In the energy sector, one firm that is expected to significantly outperform the broader U.S. equity market over the next 1 to 3 months is Ferrellgas Partners LP (FGP - Analyst Report). The firm sports a Zacks Rank #1 (Strong Buy).

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