Chevron Corporation (CVX)’s Promising South American Trifecta

Nevertheless, because reality involves big oil companies signing onto potentially precarious pacts in the perpetual quest for new reserves — as with ExxonMobil’s big new venture with Russia’s Rosneft — it appears that Chevron may be in the process of reaching an agreement to ante up $1.5 billion for the right to participate in the development of the Vaca Muerta basin, which it believes to be the world’s second-largest unconventional oil reservoir.

So Chevron will cast its lot with the wobbly administration of President Kirchner, which is battling sky-high inflation and less than amused creditors. Others are already involved there, including Apache Corporation (NYSE:APA) and EOG Resources Inc (NYSE:EOG), which were among the companies that discovered oil and gas in the Vaca Muerta shale a couple of years ago. And there will be more to come, since Chevron’s $1.5 billion is a tenth of the amount that YPF intends to raise.

Back to work in Brazil

Finally, regarding Brazil, Chevron was granted permission last month by the National Petroleum Agency to resume operations at its Frade field off Rio de Janeiro. The company had been shut down there since a November 2011 spill — or possibly a seepage — leaked about 2,600 barrels of crude into the Atlantic Ocean.

Criminal charges initially leveled against employees of Chevron and driller Transocean LTD (NYSE:RIG) have been dropped, but the country is still seeking $20 billion in damages from the pair. For the sake of perspective, that’s identical to the amount of the initial trust established by BP plc (ADR) (NYSE:BP) in response to the 2010 Macondo blowout, which gushed 4.9 million barrels of Louisiana sweet crude into the Gulf of Mexico.

Foolish takeaway

Chevron’s affairs in South America are pointing in a far more positive direction than was the case a year ago. Add to that the company’s bevy of other successful global operations, its solid balance sheet, and you have a positive energy addition to any Foolish portfolio.

The article Chevron’s Promising South American Trifecta originally appeared on Fool.com and is written by David Smith.

Motley Fool contributor David Smith owns shares of BP p.l.c. (ADR) and Transocean. The Motley Fool recommends Chevron. The Motley Fool owns shares of Apache and Transocean.

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