U.S. energy behemoth Chevron Corporation (CVX) announced that it has entered into a deal with Argentina-based integrated oil firm YPF SA (YPF).
Per the agreement, both the companies have decided to invest extra $1.6 billion to sustain the exploration and advancement of the shale oil and gas properties in Vaca Muerta formation. Both the companies are likely to drill roughly 170 wells in the Vaca Muerta’s 96,000-acre of land, in 2014. Vaca Muerta − situated in Argentina − has a rich deposit of shale oil and natural gas.
Included in the deal, Chevron will also explore 49,400 acres in the Narambuena region. Narambuena is located in the Vaca Muerta formation.
Chevron believes that the drilling and exploration program will help the company drive production significantly in the long run.
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. The company divides its operations into two main segments: Upstream and Downstream.
However, Chevron expects to post lower first-quarter 2014 earnings than the previous quarter, owing to substantial currency conversion expenses along with asset impairment charges.
As such, Chevron 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.
Meanwhile, one can look at better-ranked players in the energy sector like Range Resources Corp. (RRC), Helmerich & Payne Inc. (HP) and Unit Corp. (UNT). All the stocks sport a Zacks Rank #1 (Strong Buy).