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Chevron's (CVX) Noble Energy to Pay NIS 3.2M Emission Penalty

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Zacks Equity Research
·3 min read
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Chevron Corporation’s CVX newly-acquired entity Noble Energy has been imposed a penalty of NIS 3.2 million (around $983,000) by Israel’s Ministry of Environmental Protection for breaching air emission standards by its Leviathan offshore gas platform.

The fine follows the NIS 3.8-million penalty that Noble Energy was charged in November for violating the water pollution regulations at the Leviathan gas platform. The platform, which is placed 9.7 kilometers from Dor Beach, north of Caesarea, began operating last December.

The Environmental Protection Ministry of Israel reported that the toxic emissions released from the rig were 120-180% of the amount permitted in January and February. The ministry also alleged Noble Energy of severely violating certain rules, involving the operation of flare stacks at the offshore gas rig as it puts inhabitants at risk due to the frequent platform flaring.

Earlier, Chevron-Noble’s Leviathan violated several Israeli regulations in its first business year, which is why the ministry hired RPS Group plc, a British firm, to investigate the operating defects on the rig. The firm observed that the platform workers were unaware of the industry-standard accident investigation procedures and failed to provide the firm’s hazard assessment resources. Moreover, operators were indifferent toward the danger caused by the major gas leak on May 2.

Notably, Noble Energy's shares in the Leviathan gas fields are significant components of its development portfolio, and one of the primary reasons for its acquisition by Chevron. However, the repeated penal action against Noble Energy outlines the significant risk it imposes as the company has failed to abide by the rules necessary for the operation.

Company Profile & Price Performance

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.

The company’s shares have underperformed the industry in the past three months. Its shares have gained 13.4% compared with the industry’s 17% growth.



Zacks Rank & Stocks to Consider

Chevron currently carries a Zack Rank #3 (Hold).

Some better-ranked players in the energy space DCP Midstream Partners, LP DCP and are China Petroleum & Chemical Corporation SNP, each currently sporting a Zacks Rank #1 (Strong Buy), and Summit Midstream Partners, LP SMLP, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DCP Midstream is expected to see earnings growth of 202.4% in 2021.

In the past 60 days, the Zacks Consensus Estimate for China Petroleum’s 2020 earnings have been raised by 219.3%, while Summit Midstream’s2020 earnings has been raised by 24%.

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