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Chevron West Texas Pipeline Blows Up

Zacks Equity Research

Leading integrated energy firm, Chevron Corp. (CVX) reported an explosion in its West Texas pipeline system, near Milford. The incident occurred in the morning of Nov 14.

The rupture was caused as workers mistakenly drilled into the 10-inch liquefied petroleum gas (:LPG) pipeline. The company emphasized that it did not compromise on the safety of its crew and evacuated them unharmed.

The pipeline had been shut down but the rising flames continued to threaten the surrounding population. Chevron is depressurizing the pipeline and has somewhat succeeded to control the fire.

The company is working along with the local and state authorities to take necessary measures for human protection. Local bodies have asked about 700 people to evacuate the small North Texas town of Milford, forming a 1.5 mile evacuation zone.

The company continues to monitor a 14-inch LPG pipeline that is located nearby. Chevron is depressurizing the pipeline but the flow of liquid has not yet been stopped as it cools the line to prevent a second mishap.

Chevron holds an 80% interest in the 2,295-mile West Texas LPG pipeline system that transfers natural gas liquids (NGLs) from New Mexico and Texas to Mont Belvieu, Texas. The remaining stake is held by AtlasPipeline Partners LP (APL).

San Ramon, Calif.-based Chevron 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 carries a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider other better performing energy sector stocks like Matador Resources Co. (MTDR) and SM Energy Co. (SM) that offer value. Both these firms sport a Zacks Rank #1 (Strong Buy) and offer value.

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