Chevron Corporation (CVX) Grows LNG Volumes Faster Than Major Peers

January 14, 2013

Chevron Corporation (CVX) continues growing LNG volumes at one of the fastest rates among big oil and gas majors despite cost increases in its Australian developments, which have caused the company to increase its capex payments in the region, says Iain Reid, Senior Equity Research Analyst at Jefferies & Company, Inc.

“We [have] a positive recommendation on Chevron, which is a developer of two of the largest of the Australian projects, which are currently going ahead at the moment, Gorgon, and a development called Wheatstone. And Chevron is the largest resource holder of gas offshore the northwest shelf of Australia,” Reid said.

Reid says, however, CVX announced a 40% increase in the cost of the Gorgon project, leading to a capex rising of $37 to $52 billion, casting shadows on the upside the company could have experienced from its Australian LNG project, yet the growth rate of LNG volumes still poses a positive for the company.

“[CVX] was our top large-cap pick when we produced this piece of research this time last year, but the cost increase in Gorgon has, we think, cast a bit of shadow over the stock in that sense, but it is still a very important company in terms of global LNG, and CVX is certainly the company which is growing the fastest of the big majors in LNG volumes because of these two huge projects they have in Australia,” Reid said.