Written by Miranda Marquit
Saudi allows CVX to continue its operations in the kingdom on behalf of the government.
Chevron (CVX) has been operating in the Partitioned Neutral Zone on behalf of the Saudi government since 2001, when it acquired Texaco, which was in a 60-year arrangement with the kingdom. Now Chevron has extended the agreement for another 30 years, reports The Wall Street Journal:
Under the agreement, Chevron will continue operating on behalf of the Saudi government, which has a 50% interest in the petroleum resources of the zone's onshore area. The operations are managed jointly by Chevron's Saudi unit and Kuwait Gulf Oil Co., which owns the other 50% stake. Chevron's output is for the kingdom. This is good news for CVX, which can now boost its current reserves report. Chevron hasn't been counting possible reserves from the zone because it was concerned that the agreement would expire in February.
CVX is paring some of its earlier losses today, and is currently on the rise.
Disclosure: I do not invest in CVX.