Chevron Corp.’s share price up, to “indefinitely” suspend its plans for oil drilling in the Arctic Beaufort Sea

Chevron Corp. revealed in a letter to the National Energy Board of Canada that it has decided to “indefinitely” cease plans to drill for oil in the Arctic Beaufort Sea. The companys choice was explained to be due to the lack of certainty in the projection of crude prices.

The company owns two licenses that give it the right for exploration in the Beaufort Sea.

As reported by Reuters, Chevron said in its letter to Canadian regulator: “Chevron has put its drilling plans for EL 481 on hold indefinitely.” The information was confirmed by a spokesman of the company.

Regardless of that there is not a direct relation between the companys move and the oil prices 48% decline since June this year, Chevrons step to suspend its Arctic offshore drilling program comes as a sign that oil companies are pressed by cash flows to start looking for frugalities.

Arctic drilling is considered as one of the most costly oil exploration forms. Chevron did not intend to start drilling the first well in the region in at least a decade.

In May the National Energy Board was asked by the U.S.-based company to tighten the offshore-drilling restrictions, which would have been helpful for Chevron in order to cut the expenses of operating in the High Arctic region.

Chevron had been working in collaboration with the oil equipment maker Cameron International on a new design of blowout preventer. This project is to be ceased now.

Chevron Corp. was up 2.84% to close at $109.03 per share yesterday, marking a one-year drop of 10.34%. The company is valued at $200.42 billion. The companys shares traded at €88.72 in Frankfurt as of 8:14 GMT. According to CNN Money, the 22 analysts offering 12-month price forecasts for Chevron Corp. have a median target of $125.50, with a high estimate of $145.00 and a low estimate of $100.00. The median estimate represents a +17.40% increase from the last price of $109.03.