While tough times make things difficult for everyone, Chevron
Oil in the battle zone
The company has shut in about 100,000 barrels a day of Nigerian crude production following a pipeline attack by the Movement for the Emancipation of the Niger Delta, or MEND. The group, made up of tribesmen from the region, has intermittently attacked oilfield infrastructure and employees during the past few years. The most recent skirmishes have lasted about two weeks.
Although none of the other companies operating in the area -- including ExxonMobil
Waiting for the verdict
But Nigeria isn't the only place on which Chevron has its corporate eyes trained. The company, which acquired Texaco in 2001, expects any day to receive a verdict from a court in Ecuador relating to Texaco's having allegedly deposited a mixture of oil and water into open pits in the country in the 1990s.
A victory for those who claim their homeland was polluted by Texaco could cost Chevron as much as $27 billion. That's a big number, given that Chevron's lead corporate counsel has pointed to actions that have compromised the trial process in Ecuador in favor of the locals.
All of these difficulties -- you could also throw in minor events in Kazakhstan and criticism of Chevron's Burmese operations -- may explain why, when Venezuelan President Hugo Chavez removed a number of major oil companies as operators, the company didn't take the lead of Exxon and ConocoPhillips
Chevron's difficulties notwithstanding, I'm still cautiously optimistic about the company. With a reasonable valuation and a good dividend yield -- not to mention my contention that crude prices are headed higher -- Chevron deserves a place on your watch list.
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