Of all the energy majors, Chevron has been the most aggressive in trying to transplant the US shale gas boom to Europe.
Last week, it took another bold step by moving into Lithuania, where it bought a 50% stake in LL Investicijos, an obscure holding company that controls a drilling license in the prospective area of Rietavas, in the Northwest of the Baltic nation.
Lithuania hasn't been known for having major shale gas deposits to date. But Chevron says the country shares the Baltic geological basin with Northern Poland. The US company acquired licenses to the south, which is part of the same geological formation.
Its latest acquisition further north is a gamble that if shale gas is present and commercially available in Poland, it is also likely present in Lithuania.
According to the US Geological Survey, Lithuania has around 120 billion cubic meters of recoverable shale gas.
Chevron has not disclosed the price it paid for its stake in LLI, but, under the terms of the deal made public, the US company has a call option, exercisable within three years, for additional shares. Chevron must also fund a work program, including conducting seismic surveys and drilling several new exploration wells.
According to company filings, LL Investicijos has no revenue streams and no major assets, other than the license. Its listed address is the office of Minijos Nafta, a conventional oil exploration company run by an American, Thomas Haselton.
In an interview Tuesday, Haselton confirmed he was an indirect shareholder in LL Investicijos. He said he acquired his interest in December 2011, and on-sold part of it to Chevron in the deal closed October 24. Other indirect shareholders include Tethys Oil -- the small exploration company headed by Vincent Hamilton, husband of Mona Lundin-Hamilton, of Lundin Petroleum. Haselton's Russian-born wife, Natalia, is managing director.
Haselton has a long history as an oil man, but he started out as a sailor.
He served in the Vietnam War as a member of SEAL team one -- the US Navy's special forces unit, which became known for killing of Osama Bin Laden in 2011.
After his return to civilian life, he completed a master's degree in geology and went to work for Phillips Petroleum in 1978. In the 1990s, he worked in the Russian oil business; he then moved to Lithuania after becoming general manager of Minijos Nafta in 1998. His investment vehicle, Odin Energi, controls half the shares in Minijos Nafta, while Polish exploration company, Lotos Geonafta, controls the other half. He declined to name who the other investors in Odin Energi are.
Lotos Geonafta previously held a oilfield services contract with LLI - but it is believed this has now been canceled.
Minijos Nafta has been producing conventional oil from several Soviet-era wells in the Gargzdai area of Lithuania. All are in terminal production decline -- the company produced 344,000 barrels in 2008, but only 253,000last year. But Haselton said it drilled several new exploration wells in the spring, and took core samples to be analyzed, with the hope of finding recoverable shale oil or gas.
The results, which are expected soon, could provide an insight into whether Chevron's gamble has paid off.
"The license area of Minijos Nafta is only a few kilometers from LLI, so I would say it is very likely that if we find shale hydrocarbons there, we will find them in Rietavas," he said.
Despite a request from Chevron, he said Minijos Nafta would not share the results of the core analysis.
"The other shareholder in Minijos Nafta has not allowed this," he said. Despite this, Chevron's presence in Lithuania is likely to growth in future, because the Lithuanian Geological Survey is preparing to auction off rights to a further two hydrocarbon license areas early next year.
One, in the West, is close by Chevron's newly acquired area in the West of the country, and could contain shale gas. According to Juozas Mockevicius, chairman of the LGS, Chevron is one of several companies that has expressed interest in bidding for the license area.
Haselton describes Chevron's chances of winning the auction as "good," because it is one of only a few companies that meet the bidding conditions set by the LGS.
"The conditions of the tender are for five years of operating a certain number of [shale] wells. At the moment, the only companies in the world that have that kind of experience are American and Canadian companies," Haselton said.
