Integrated energy behemoth, Chevron Corp. (CVX - Free Report) , pulled the plug on the Lithuania tender to explore shale gas in the western part of the country. The company cited changes in law as the reason for this move.
The San Ramon, California-based company was the sole bidder to explore the 1,800 square kilometers Silute-Taurage area for unconventional hydrocarbons and had won the bid last month. Lithuania estimates that the prospect could hold as much as 80 billion cubic meters of technically recoverable shale gas.
Chevron believes that the fiscal, regulatory and legislative changes that took place after it placed the bid in Jan 2013 made the venture less fruitful. Moreover, several other legislative acts have been passed after the company won the bid last month and many more are under discussion. This makes it difficult to identify the true potential of the prospect.
Chevron’s move to back out from the project could prove costly for Lithuania as the Baltic state receives its full requirement of gas from Russia and had earlier stated that it was being overcharged by the Russian gas behemoth Gazprom. Choosing Chevron for the tender was a move by the government to reduce this dependence on Russia.
However, Chevron has not withdrawn completely from Lithuania. It plans to continue its exploration activities in the 2,400 square kilometer Rietavas block that it currently holds.
Chevron is one of the largest publicly traded oil and gas companies in the world and is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses.
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, there are certain other companies in the energy sector that are expected to perform better in the short term. These include Zacks Ranked #1 (Strong Buy) Dril-Quip, Inc. (DRQ - Free Report) , Stone Energy Corp. and Pembina Pipeline Corporation (PBA - Free Report) .