Barclays maintains an 'Overweight' on Chevron (CVX); Update on Frade Field Seep

November 16, 2011 12:52 PM EST
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Price: $178.28 +0.96%

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Barclays maintains an 'Overweight' on Chevron (NYSE: CVX) price target of $138.00.

Barclays analyst says, "CVX shares fell 2.7% yesterday (11/15) compared to the North American Integrated Oil average and XOI down 0.6% and 0.3%, respectively, and the S&P500 up 0.5%. We believe CVX shares reacted to an unsubstantiated account that the oil seep in the vicinity of a Frade field appraisal well was larger than the 200-300 b/d initially estimated by Brazil's National Agency of Petroleum (ANP)...In light of ANP's estimate that the spill could have been 200-300 b/d and other reports suggesting upwards of 10x that amount (Business Insider, 11/15, Chevron's Oil Spill Off Brazil Could Be 10 Times Bigger Than Official Estimates), CVX issued a press release yesterday reiterating the original 400-650 barrel surface sheen estimate.

"Recent oil spill incidents in Brazil suggest the maximum fine imposable by the ANP at R$50 million, or US$28 million (based on current exchange rate of
$R1.7723/USD). The federal government can also impose additional fines, which in the most severe case of a Petrobras (NYSE: PBR) refinery spill brought total fines to $4,700 per barrel spilled. CVX is 51.7% owner and operator of the Frade field with PBR and Frade Japao at 30% and 18.3%, respectively."

For an analyst ratings summary and ratings history on Chevron click here. For more ratings news on Chevron click here.

Shares of Chevron closed at $103.27 yesterday.


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