Back to top

Analyst Blog

Chevron China Energy Company – subsidiary of the U.S. energy behemoth Chevron Corporation (CVX - Analyst Report) – entered into two production sharing agreements with China National Offshore Oil Corporation – parent company of the Chinese energy giant CNOOC Ltd. (CEO - Analyst Report).

The contracts are for the exploration of blocks 15/10 and 15/28 located in Xijiang Sag of Pearl River Mouth Basin in the eastern part of the South China Sea. Together, the blocks cover an area of about 2,233 square miles in water depth of 50–100 meters.

Per the deals, Chevron will have 100% stake in both the shallow water blocks, while CNOOC will have the right to share up to 51% in any commercial discovery. Chevron will operate both the blocks and will carry out 3D seismic data surveys. The cost of the same will be borne by Chevron. No other financial term was disclosed.

This deal is a part of the strategic move by Chevron to develop its business in the Asia Pacific region.

Chevron is currently a Zacks Rank #3 (Hold) stock, implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months. We are also maintaining our long-term Neutral recommendation on the stock.

The energy giant’s current oil and gas development project pipeline is among the best in the industry, boasting large and multi-year projects. Additionally, this second-largest U.S. oil company by market value after ExxonMobil Corporation (XOM - Analyst Report) possesses one of the healthiest balance sheets among its peers that help it to capitalize on strategic investment opportunities.

However, due to its integrated nature, Chevron is particularly susceptible to the 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.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
THE PANTRY… PTRY 21.02 +2.09%
INTEL CP INTC 35.15 +1.88%
CLAYTON WIL… CWEI 117.30 +1.78%