Chevron Calls Off Great Australian Bight Drilling Program
Zacks Investment Research | Oct 15, 2017 09:26PM ET
Energy behemoth Chevron Corporation (NYSE:CVX) recently announced plans to discontinue the exploration drilling program in the Great Australian Bight (GAB). The company purchased two deepwater exploration permits in 2013 with the acreage spanning more than 32,000 square kilometers. The company intended to drill four wells but has decided not to proceed with the plans owing to weak oil price environment.
Chevron’s decision to exit the region is not based on waning prospects or regulatory and environmental concerns but has been guided by commercial factors. Deepwater/ultra deepwater drilling — with its associated risks and steep costs — requires much higher oil prices than the current rates. Thus with oil rates unable to stay above the psychologically-critical $50 threshold for a sustained period, the project did not seem to be a viable one.
Notably, BP plc (NYSE:BP) was rewarded exploration licenses for four blocks in the Ceduna area of the GAB in Jan 2011. However, the company also
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