Chevron's (CVX) Wheatstone LNG Resumes Full Production
Chevron Corporation’s CVX Wheatstone liquefied natural gas (LNG) plant in Western Australia has resumed full production after a fault last week, due to which it cut output by about one-fifth and union workers began 24-hour strikes over the weekend.
The Fault and the Strike
The fault occurred on Sep 14, and the strike began on Sep 15. The strike was initiated by the Offshore Alliance union, which represents workers at the Wheatstone and Gorgon LNG facilities. The union is demanding a new enterprise agreement that includes better pay and conditions for its members.
The Resolution and Swift Recovery
The strike was suspended on Sep 17, and full production resumed at the Wheatstone plant the following night. Chevron said that there has been no change to scheduled LNG deliveries and that domestic gas production has been unaffected by the outage or strike action.
Wheatstone LNG Plant: A Key Player
The Wheatstone LNG plant is one of Australia's largest LNG facilities and has a production capacity of 8.9 million tons per annum. The plant is operated by Chevron and jointly owned by Chevron, Apache, KOGAS and Kyushu Electric Power. The resumption of full production at the Wheatstone LNG plant is a positive development for the global LNG market.
Impact of the strike
The strike at the Wheatstone and Gorgon LNG plants had a limited impact on global LNG supply, as production at the Wheatstone plant was only reduced by about one-fifth during the strike. However, the strike did highlight the potential for industrial action to disrupt LNG supplies from Australia, which is one of the world's largest LNG exporters.
Outlook for the global LNG market
The global LNG market is expected to remain tight in the near term, owing to strong demand from Asia, supply disruptions caused by the war in Ukraine and other factors. The resumption of full production at the Wheatstone LNG plant will help ease the tightness in the market, but further disruptions may occur.
Zacks Rank and Key Picks
Currently, CVXcarries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are CVR Energy CVI and USA Compression Partners USAC, both sporting a Zacks Rank #1 (Strong Buy), and Archrock AROC, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy is valued at $3.47 billion. In the past year, its shares have risen 21.3%.
CVI currently pays a dividend of $2 per share, or 5.76% on an annual basis. Its payout ratio currently sits at 30% of earnings.
USA Compression Partners is worth approximately $2.17 million. USAC currently pays a dividend of $2.10 per unit, or 9.49% on an annual basis.
The company offers natural gas compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.
Archrock is valued at around $1.90 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 5.12%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
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