Chevron (CVX) and Unions Reach Agreement, Avert LNG Plant Strikes
Chevron Corporation (CVX) successfully reached an agreement with unions representing workers at its two liquefied natural gas (LNG) export facilities in Australia, per media reports. The Offshore Alliance union confirmed the deal on Tuesday, signaling the cancellation of strikes that were to commence this Thursday.
Chevron's Australian operations at the Gorgon and Wheatstone sites play a crucial role in the global LNG landscape, collectively supplying approximately 6% of the world's LNG. This breakthrough came after several days of negotiations mediated by Australia's industrial arbitrator, the Fair Work Commission. The talks aimed to revive an in-principle agreement reached in September, which had put an end to weeks of strikes. However, that deal fell apart earlier this month when unions accused Chevron of reneging on commitments.
In a statement, Brad Gandy, a spokesperson for the Offshore Alliance, commended the patience shown by workers during the protracted negotiations. He blamed Chevron for attempting to backtrack on the tentative deal agreed upon last month. Gandy emphasized that if Chevron were to attempt further alterations to the deal, the workers would have no choice but to consider protected industrial action.
The company had previously stated that only a few issues were standing in the way of an agreement, including matters related to meal and travel reimbursements. Energy analyst Saul Kavonic highlighted that it was the last-minute concessions made by Chevron that paved the way for a renewed agreement and the withdrawal of strikes.
He noted that the remaining negotiation items were not of such significance that they couldn't be resolved, and the real obstacle had been the breakdown of trust between the parties. This agreement is expected to mitigate the risk of strikes at Australia's largest offshore LNG projects.
Zacks Rank & Other Key Picks
Chevron currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the energy sector are Matador Resources Company MTDR and Pioneer Natural Resources Company PXD, each currently sporting a Zacks Rank #1 (Strong Buy), and Diamondback Energy Inc. FANG, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Matador Resources is among the leading oil and gas explorers in the shale and unconventional resources in the United States. The company’s prime intention is to create more value for shareholders and generate lucrative returns from the capital invested in unconventional plays. MTDR has witnessed an upward earnings estimate revision for 2024 over the past seven days.
Pioneer Natural Resources is a leading upstream energy firm with primary operations in the Permian basin, which is among the lucrative oil shale plays in the United States with fewer risks. Its total holding of more than 1 million net acres in the Permian basin will support long-term oil production growth. PXD has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 30 days.
Diamondback Energy is an independent oil and gas exploration and production company with its primary focus on the Permian Basin, where it has around 491,000 net acres. With an attractive production profile, favorable industry trends and FANG’s low breakeven economics, the margin of safety on investment is likely very high. The company has witnessed an upward earnings estimate revision for 2023 in the past seven days.
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