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Chevron (CVX) Produces First Gas From Alen Field, Offshore EG

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Zacks Equity Research
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Chevron Corporation CVX recently produced first gas from the Alen gas monetization project, situated offshore Equatorial Guinea (“EG”).

In April 2019, Noble Energy,which is currently owned by Chevron, had approved the development of the Alen natural gas project. Gross capital expenditure for the development of the project was estimated to be $330 million.

The Alen field is located on Block O (95%) and Block I (5%), offshore EG. Noble Energy operates the Alen field and holds nearly 45% working interest in the project (45% in Block O and 38% in Block I). Other Block O interest owners include Glencore with 25% stake, and GEPetrol with the remaining 30%. Other Block I interest owners include Glencore, Atlas, GEPetrol and Gunvor, with respective interests of 23.75%, 27.55%, 5% and 5.7%.

The project includes a 70 kilometer long pipeline that could carry up to 950 million cubic feet of natural gas equivalent per day (MMcfe/d) from the Alen field, located in the Douala Basin. The gas produced from the field will then be processed via onshore existing facilities to boost development of current and future regional gas resources.

The Alen gas project is a major effort toward the country’s planned EG gas mega-hub. The hub aims to use the existing infrastructure and develop a flourishing gas industry in EG, which will enable future discovered resources to be processed in the country.

In order to further process and convert the gas into LNG, the Alen gas monetization project enables the shipping of gas to existing onshore facilities at Punta Europa (the Alba plant and the EG LNG plant) from offshore production infrastructure.

Last October, Chevron completed the acquisition of Noble Energy in an all-stock deal worth $5 billion, following the approval of the latter’s shareholders.

The takeover, which is one of the largest energy deals since the beginning of the coronavirus pandemic, gave Chevron vital access to Noble Energy’s low-cost, proven reserves along with its cash-generating offshore assets in Israel, especially the flagship Leviathan natural gas project. This, in turn, boosted the company’s base in the Mediterranean.

Company Profile

Chevron is one of the largest publicly traded oil and gas companies in the world with operations spread to almost every corner of the globe. This San Ramon, CA-based company is fully integrated, which is indicative of its participation in every energy-related aspect, right from oil production to refining and marketing.

Zacks Rank & Key Picks

Chevron has a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are Matador Resources Company MTDR, Diamondback Energy, Inc. FANG and Denbury Inc. DEN, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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