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The Australian arm of the integrated energy behemoth, Chevron Corp. (CVX - Analyst Report), received a conditional approval from the Australian Environmental Protection Authority (EPA) to expand its Gorgon liquefied natural gas facility.

The approval includes an additional 32 hectares of land on Barrow Island to facilitate construction work to support the existing project. This increases Chevron’s footprint on the island to 332 hectares. However, the EPA has also stated that Chevron must offset the negative impact that such an expansion would have on the local wildlife.

The report submitted by the EPA is open for a public appeal for a two-week period ending Jan 20, 2014.

San Ramon, California-based Chevron is one of the largest publicly traded oil and gas companies 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.

Chevron possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions. Moreover, the company’s current oil and gas development project pipeline is among the best in the industry, boasting large, multi-year projects.

However, due to its integrated nature, Chevron is particularly susceptible to downside risk from any weakness in the global economy. We are also concerned about the company’s high level of capital spending, which may result in reduced returns going forward.

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

Meanwhile, one can consider better-ranked energy sector stocks such as Williams Companies, Inc. (WMB - Analyst Report), Helmerich & Payne, Inc. (HP - Analyst Report) and Athlon Energy Inc. (ATHL - Snapshot Report). All these stocks currently sport a Zacks Rank #1 (Strong Buy).

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