Chevron (CVX) Halts Production in Thailand Post Fatal Explosion
Chevron Corporation CVX, a leading oil and gas company, recently announced the suspension of production at the Benchamas oil field in the Gulf of Thailand due to a fatal explosion last week. The accident involved an oil storage vessel that caused seawater to enter the vessel's hull, resulting in the death of one crew member.
The Benchamas field, located in Block B8/32 in the Gulf of Thailand, is home to the 25-year-old vessel with a storage capacity of 650,000 barrels. The vessel is managed by a Chevron unit and situated about 207 km off Sattahip in Chon Buri province, known for housing Thailand's largest naval base.
Causes of the Explosion
Initial investigations revealed that the explosion was caused by a technical malfunction during maintenance work. The fault led to an increase in pressure, causing the gas to escape and ignite, and hence the explosion. Chevron has assured the public that it is taking every necessary step to prevent such incidents in the future.
Impact of the Explosion
The explosion has had a significant impact on the local community as well as the company's operations. Apart from decreasing the company’s revenues, the suspension of production has also disrupted the local economy.
In response to the incident, Thai government agencies are on high alert for any potential oil spill from the floating storage and offloading vessel. At the time of the accident, the vessel had approximately 400,000 barrels of oil on board. The Benchamas field has been producing approximately 13,000 barrels of oil per day and 45 million cubic feet of natural gas per day.
Chevron assured the public that the explosion did not harm the environment, and it is focused on ensuring the safety of its staff and the community. It has launched an investigation to determine the cause of the incident and prevent it from occurring in the future. The company is also working closely with the local authorities and offering assistance where needed. A Chevron spokesperson announced that the victim's body has been recovered and will be returned to their family.
While the incident is a stark reminder of the risks associated with the oil and gas industry, Chevron remains committed to upholding its responsibilities and continuing to work toward a safer and more sustainable future.
Zacks Rank and Key Picks
Chevron, a leading integrated energy company with operations worldwide, generates approximately $95 billion in annual revenues and produces more than 3 million barrels of oil equivalent per day.
Currently, Chevron carries a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at some better-ranked stocks like NGL Energy Partners NGL, sporting a Zacks Rank #1 (Strong Buy), and Energy Transfer ET and Helix Energy Solutions Group HLX, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NGL Energy Partners: The company is worth approximately $451.75 million. Its shares have increased 48.8% in the past year.
NGL is a limited partnership company that operates a vertically-integrated propane business with three segments — retail propane, wholesale supply and marketing, and midstream.
Energy Transfer LP: The company is valued at around $38.99 billion. It delivered an average earnings surprise of 11.43% for the last four quarters and its current dividend yield is 9.48%.
ET currently has a forward P/E ratio of 9.17. In comparison, its industry has an average forward P/E of 9.40, which means the company is trading at a discount to the group.
Helix Energy Solutions Group: The company is valued at around $1.20 billion. In the past year, its stock has increased 63.3%.
HLX currently has a forward P/E ratio of 12.02. In comparison, its industry has an average forward P/E of 12.50, which means the company is trading at a discount to the group.
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