Chevron Corporation (CVX Quick QuoteCVX - Free Report) is strengthening its position in Namibia’s Orange Basin as a key exploration catalyst. The company’s affiliate Harmattan Energy Ltd. recently agreed to acquire Trago Energy Pty Ltd.’s 10% participating interest in Petroleum Exploration License 90 (PEL 90). Trago, a subsidiary of Custos Energy (Pty) Ltd., will receive $11 million in cash at closing, along with contingent consideration linked to future appraisal and production milestones. The transaction remains subject to government, regulatory and third-party approvals.

This agreement is notable because it follows Chevron’s decision in August to farm out a 17.4% interest in PEL 90 to Equinor (EQNR Quick QuoteEQNR - Free Report) . Rather than simply reducing its exposure to the license, Chevron is now adding another 10% interest. The transaction would increase Chevron’s participating interest in PEL 90 if both the Equinor farm-out and the Trago acquisition are completed.

Chevron Reshapes Its PEL 90 Position

Before the Equinor transaction, Chevron held a 52.5% participating interest in PEL 90. QatarEnergy owned 27.5%, while Trago Energy and Namibia’s state-owned oil company NAMCOR each held 10%. Equinor’s planned acquisition would lower Chevron’s interest to 35.1% once completed. The latest agreement would lift it to 45.1%, assuming both transactions close.

That ownership structure gives Chevron a sizeable economic interest without carrying the entire exploration burden. Equinor’s planned entry would add another major international energy company to the PEL 90 partnership. Chevron, meanwhile, continues to operate PEL 90, preserving control over the exploration program.

The transaction comes as Chevron prepares for another exploration well on PEL 90. PEL 90 covers Block 2813B in the Orange Basin, a frontier region that has drawn major industry attention because of discoveries in the broader basin. The license covers about 5,433 square kilometers, according to Sintana Energy, and is located near the Venus discovery operated by TotalEnergies (TTE Quick QuoteTTE - Free Report) .

Nabba-1X Offers a Near-Term Catalyst

For investors, the next major development to watch is the planned Nabba-1X exploration well. Chevron plans to drill the Nabba-1X exploration well on PEL 90 in the fourth quarter of 2026 as part of a wider multi-well exploration campaign across Sub-Saharan Africa.

Nabba-1X will be Chevron’s second exploration well offshore Namibia after Kapana-1X reached total depth in January 2025. The earlier well did not encounter commercial hydrocarbons, although the drilling program generated geological information that the company can use in planning future activity.

That makes Nabba-1X a potentially important value driver. A commercial discovery would strengthen the case for further appraisal and development across PEL 90 and could increase the long-term value of Chevron’s position. However, the project remains at the exploration stage, so investors should not treat potential resources as established reserves.

Broader African Exploration Push

The Namibia transaction also fits Chevron’s broader push to expand its frontier exploration portfolio in Africa. The company has outlined activity across Namibia, Angola, Guinea-Bissau and Equatorial Guinea as part of a multi-well program designed to pursue high-impact opportunities. In September, Chevron outlined exploration activity across several Sub-Saharan African basins as part of its broader exploration program.

For Chevron, this strategy can add future production opportunities without relying solely on mature assets. Frontier exploration, however, comes with significant geological and execution risks. The outcome of individual wells can be difficult to predict, and unsuccessful drilling can delay development plans while increasing capital requirements.

Investment Takeaway

The Trago transaction gives Chevron a larger stake in PEL 90 at an important point in the asset’s exploration cycle. The $11 million upfront payment is modest relative to Chevron’s scale, but the additional interest increases its exposure to any success from Nabba-1X and subsequent appraisal activity. Contingent consideration tied to commercial production also underscores the potentially longer-term nature of the transaction.

At the same time, investors should recognize that the deal does not remove the uncertainty surrounding the asset. Completion of the transaction still requires approvals, while the upcoming well must establish commercial potential before PEL 90 can become a meaningful production asset.

Overall, Chevron’s decision to increase interest in PEL 90 signals that it sees sufficient potential in the acreage to justify a larger position ahead of Nabba-1X. The well’s result should therefore be the key near-term event to watch, with a successful outcome capable of improving the long-term growth profile of Chevron’s upstream portfolio.

CVX's Zacks Rank & Another Key Pick

Currently, CVX and EQNR carry a Zacks Rank #2 (Buy) each, while TTE has a Zacks Rank #3 (Hold).

Equinor is a Norway-based integrated energy company with operations spanning oil and gas, renewables and low-carbon solutions. The company’s upstream portfolio is anchored by the Norwegian Continental Shelf, while its international operations include oil and gas assets across the United States, Brazil, Angola, the United Kingdom and Canada. On the other hand, TotalEnergies is a France-based global integrated energy company engaged in oil, natural gas, biofuels, renewables and electricity. The company operates across the energy value chain in about 120 countries and produced 2.5 million barrels of oil equivalent per day in 2025, including 46% from natural gas.

Investors interested in the energy sector might consider another top-ranked stock, such as  Delek US Holdings (DK Quick QuoteDK - Free Report) , sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek US Holdings is valued at $4.54 billion. It is a diversified downstream energy company engaged in petroleum refining, renewable fuels, asphalt production and logistics operations. Delek US Holdings operates multiple refineries in the United States and is committed to delivering safe, reliable energy while investing in cleaner energy initiatives.