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More Reasons to Like Big Oil

By David Smith - Updated Apr 5, 2017 at 8:05PM

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Whether battling overseas forces or building U.S. production, Big Oil gets it done.

Monday saw the end of an epic struggle for Chevron (NYSE:CVX), as the company got a favorable ruling in a case that began 10 years ago in Nigeria. The verdict, which would be worthy fodder for a film screenwriter, finally cleared the company of charges related to a 1998 incident, in which two Ilaje villagers were killed by the Nigerian military.

As I see it, the case gives just one example of a difficulty that Western integrated oil companies frequently face as they attempt to locate and develop oil and gas reserves in such faraway parts of the world. Despite the favorable verdict, I also expect more of those companies' activities to return to North America, as they help the less financially flush independent producers -- including Chesapeake (NYSE:CHK) and Devon (NYSE:DVN) -- in developing their new unconventional plays, including the Haynesville Shale in northern Louisiana and the Bakken oil play in the Dakotas.

Chevron potentially faced liability because of the Alien Tort Claims Act, a 1789 law that lets aliens file suit in U.S. courts when they believe there has been a violation of international laws by Western companies. The allegation in the case was that Chevron's decision to call in the Nigerian military following three days of protests on a company offshore facility ultimately resulted in the two deaths.

The Alien Tort Claims Act has been used infrequently, but it'll get another try next year involving Royal Dutch Shell (NYSE:RDS-A). That case will examine allegations that Shell was complicit in the death of Nigerian activist Ken Saro-Wiwa.

What does this all mean for Fools with a yen for energy investments? For my money, it demonstrates the staying power of the major energy companies in a world that's both economically and geopolitically topsy-turvy. For example, ExxonMobil (NYSE:XOM) and BP (NYSE:BP) have thus far overcome difficult circumstances in Russia.

So as one who believes that 2009 will be far more active from an energy perspective than most analysts expect, I'm inclined to look closely at these Big Oil players that are able to survive overseas shenanigans while they reinvigorate their opportunities in North America.

 For related Foolishness:

Chesapeake Energy is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned above. He does, however, welcome your questions, complaints, or comments. The Fool has a disclosure policy.

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Stocks Mentioned

Chevron Corporation Stock Quote
Chevron Corporation
$153.41 (-0.15%) $0.23
Royal Dutch Shell plc Stock Quote
Royal Dutch Shell plc
BP p.l.c. Stock Quote
BP p.l.c.
$30.16 (1.69%) $0.50
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
$88.95 (0.56%) $0.50
Chesapeake Energy Corporation Stock Quote
Chesapeake Energy Corporation
Devon Energy Corporation Stock Quote
Devon Energy Corporation
$57.52 (1.54%) $0.87

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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