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Chevron Australia Pty Ltd – an affiliate of Chevron Corporation (CVX - Analyst Report) – announced the discovery of natural gas in Kentish Knock South-1 exploration well in the Exmouth Plateau area, offshore Western Australia.

Located in the WA-365-P permit block in the Carnarvon Basin, the well is estimated to hold approximately 246 feet of net gas pay in the upper Mungaroo Sands. The well, about 173 miles to north of Exmouth, was drilled at 3,832 feet to a total depth of 10,056 feet.

The Australian unit of Chevron acts as the chief operator of the block with 50% interest, while the remaining stake is owned by Royal Dutch Shell plc (RDS.A - Analyst Report).

We believe that this exploration success will boost Chevron’s growth prospects in Australia by adding to its already significant gas interests in the country.

Earlier in December, the company announced the discovery of natural gas in Pinhoe-1 and Arnhem-1 exploration wells in the Exmouth Plateau area, which marked Chevron’s nineteenth find in the country since mid-2009.

We believe that successful drilling activities along with these prominent projects will establish Chevron as a leader among natural gas and LNG suppliers in the Asia-Pacific belt.

The company 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 one to three months.

Chevron’s current oil and gas development project pipeline is among the best in the industry, targeting volume growth of 20% by 2017 – more than twice the rate of growth from 2003 to 2010. The growth will be driven by the big Australian gas projects (Gorgon and Wheatstone).

However, the company 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.

But there are certain other companies in the oil industry that are expected to perform well in the coming one to three months. These include Cabot Oil & Gas Corp. (COG - Analyst Report) with Zacks Rank #1 (Strong Buy), and Total SA (TOT - Analyst Report) with Zacks Rank #2 (Buy).

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