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Chevron (CVX) Permits the Deepwater Gulf of Mexico Project

Zacks Equity Research
·3-min read

The American oil and gas supermajor, Chevron Corporation CVX, recently announced that it authorized the Ballymore project in the U.S. Gulf of Mexico. With a design volume of 75,000 barrels of crude oil per day, the undertaking would be developed as a three-mile subsea tieback to the prevailing Chevron-run Blind Faith platform.

Steve Green, President of Chevron North America Exploration and Production, mentioned that the company’s U.S. Gulf of Mexico output has one of the lowest carbon intensities in its portfolio and a fraction of the global industry average. He added that this project is anticipated to add a dependable supply of the U.S.-produced energy to meet the global demand and that this project is designed to reduce development costs by using a subsea tieback approach, standardized equipment and repeatable engineering solutions and leveraging the current infrastructure.

The undertaking at Ballymore will be CVX’s first development in the Norphlet trend of the U.S. Gulf of Mexico. The project will be in the Mississippi Canyon area in approximately 6,600 feet of water, roughly 160 miles southeast of New Orleans. Per Chevron, possibly recoverable oil-equivalent resources for Ballymore could be more than 150 million barrels.

The project, which involves three production wells tied back via one flowline to the nearby Blind Faith facility, will need an investment of about $1.6 billion. The existing infrastructure is to be used for the transportation of the produced oil and natural gas. Ballymore is expected to pump its first oil in 2025.

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Chevron is one of the largest publicly traded oil and gas companies in the world with operations spanning worldwide. The only energy component of the Dow Jones Industrial Average, CVX is fully integrated as it participates in every aspect related to energy, from oil production to refining and marketing. The company generates around $95 billion in annual revenues and produces more than three million barrels per day of oil equivalent. It currently churns out oil and natural gas at a 59/41 ratio. As of the end of 2021, the company had proved reserves of approximately 12.4 billion barrels of oil equivalent.

Chevron currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space that warrant a look include ConocoPhillips COP, PDC Energy PDCE and Marathon Oil MRO. While PDC Energy and Marathon Oil each sport a Zacks Rank #1 (Strong Buy), ConocoPhillips carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips is valued at around $135.8 billion. The consensus estimate for ConocoPhillips’ 2022 earnings has been revised 38.6% upward over the past 60 days.

COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 7.6%. ConocoPhillips has rallied around 92.7% in a year.

PDC Energy’s stock has gone up 71.8% in a year. The Zacks Consensus Estimate for PDC Energy’s 2022 earnings has been revised about 30.8% upward over the past 60 days from $13.41 per share to $17.54.

The Zacks Consensus Estimate for PDCE’s 2022 earnings is pegged at $17.54 per share, up 119.5% from the projected year-ago earnings of $7.99.

Marathon Oil’s stock has gone up 131% in a year. Marathon Oil beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 23%.

The Zacks Consensus Estimate for MRO’s 2022 earnings is projected at $4.75 per share, up about 202.5% from the projected year-ago earnings of $1.57.


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