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Chevron's (CVX) Noble Energy Fined by Israel for Pollution

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Zacks Equity Research
·3 min read
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Chevron Corporation’s CVX recently-acquired entity Noble Energy was imposed with a penalty of $1.1 million by Israel’s Ministry of Environmental Protection for violating the water pollution regulations by its Leviathan gas platform. The fine is being slapped nearly a month after Chevron’s acquisition of the independent producer’s assets.

Chevron-Noble’s Leviathan gas platform is placed 9.7 kilometers from Dor Beach, north of Caesarea, and became operational last December. The platform received a permit to release industrial sewage into the open sea. However, several testing by the ministry's marine unit had shown violations of some of the water discharge permits, including failure to report deviations to ministry inspectors, within the initial five months after the start.

The environment ministry reported that the fine was levied based on Israel's Prevention of Sea Pollution from Land-Based Sources Law, including a series of hearing from Noble Energy's managers at the ministry's Marine Environment Protection Division.

Previously, Leviathan violated several Israeli regulations in its first year of operation. The ministry hired RPS Group plc, a British firm, to investigate the operating faults on the Leviathan rig. The RPS observed that the platform workers were unaware of the industry-standard accident investigation procedures and failed to provide the firm’s own hazard evaluation materials. In fact, the operators were clueless regarding the danger caused by the major gas leak, which occurred on May 2. The ministry criticized Noble Energy-Chevron’s failure to follow up with the flare stack emissions as the near-shore rig puts the inhabitants at risk due to the frequent platform flaring.

Notably, Noble Energy's shares in the Leviathan gas fields are a vital component for its development portfolio, and one of the primary incentives for its acquisition by Chevron. However, the penal action is considered a significant enforcement step against the company as it has failed to comply with the necessary requirements for the operation.

Company Profile

Headquartered in San Ramon, CA, Chevron is one of the largest publicly-traded oil and gas companies. It is fully integrated, with operations all over the world.

Zacks Rank & Stocks to Consider

Chevron currently carries a Zack Rank #5 (Strong Sell).

Some better-ranked players in the energy space are Sprague Resources LP SRLP and DCP Midstream Partners, LP DCP, each currently sporting a Zacks Rank #1 (Strong Buy), and Enerplus Corporation ERF, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, the Zacks Consensus Estimate for Sprague Resources’2020 earnings has been raised by 54%.

DCP Midstream is expected to see earnings growth of 183.4% in 2021, while Enerplus is likely to see earnings growth of 400% next year.

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Chevron Corporation (CVX) : Free Stock Analysis Report
Enerplus Corporation (ERF) : Free Stock Analysis Report
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