Smaller Eastern European nations such as Poland and Lithuania have traditionally been rather heavily reliant on Russia for their energy needs. Massive networks of soviet-era pipelines are still supplying a large chunk of their natural gas requirements, and now these countries want to break free from this energy dependency. As these nations try to tap into their own reserves of natural gas, they are bringing in the American experts – companies like Chevron and Exxon Mobil – who are more than happy to oblige. 
Take the case of Lithuania, for example. Russian energy company Gazprom is presently Lithuania’s sole natural gas supplier. According to the country’s official geological authority, the country has local reserves of nearly 60 billion cubic meters of natural gas, enough to supply the country for twenty years at the present consumption rate.
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The key challenge lies, of course in tapping into the juice, most of which is buried beneath layers of porous rock formations called shale. Shale gas, as it is popularly called, is notoriously hard to get to, and the technology which allows the gas to be tapped has only been fully realized in the last decade or so. As a result, Chevron is moving in where local companies fear to tread. In 2012, Chevron acquired a 50% stake in LL Investicijos, a local energy firm which operates in Western Lithuania, where most of the country’s gas deposits are located. Latest news suggests that Chevron is now poised to win an exploration license in the country. If the company does win the license, it will be a major boost to its ambitions in the region, and act as another validation for our faith in the company’s ability to expand its sales capacity for natural gas globally.
Chevron is also engaged in the exploration and production in neighboring Poland and Romania but has faced opposition from groups who argue that shale gas extraction, which involves hydraulic fracturing (fracking), has severe consequences on the environment. However, politicians in the region are keen to break free of Russian influence and seem to be warming up to the idea of opening up their local reserves to foreign energy companies. With most of the Eastern European states seeing high rates of GDP growth, energy requirements may well be the key bottleneck they face as their economies chug along at an ever faster pace.
While Eastern Europe remains a hotbed for shale gas prospecting, investors should also keep in mind that Chevron is also investing significantly in regions such as Argentina, and its native hub North America, both of which hold great potential. Overall, the big picture looks bright, but it should keep in mind that holding a drilling and exploration license in a particular geography does not automatically spell big bucks for an energy company. Exxon Mobil, another American behemoth sniffing around for natural gas in Eastern Europe, learnt this lesson in 2012. Despite holding six concessions in central Poland, the company decided to exit the region after test results indicated that the project wasn’t economically viable. 
A wait and watch until the the juice actually starts flowing would make much more sense from an investor’s point of view.
We currently have a Trefis price estimate of $119 for Chevron, which is around 5% above the market price.Notes: