The crisis in Ukraine has gone on far longer than anyone thought it would and shows little sign of ending. While Russia has pulled its troops back from the border, there is good reason to believe that tensions will persist and rhetoric will continue to heat up on both sides.

#-ad_banner-#It could get real ugly real fast — if not for the fact that both sides desperately want to avoid an escalation. The eurozone sends 7.4% of its exports to Russia and receives 12% of its total imports, mostly in energy products. Russia sells more than half (53%) of its exports and receives 42% of its imports from the region. 

Russia may fall into a technical recession on second-quarter GDP results, and Europe just pulled itself out of more than a year of declining economic activity. Neither can afford the loss of an important trading partner. 

The competing economic and social forces could mean a protracted standoff. And that could mean big changes to oil exploration in Europe — and one company in particular.

Russia has responded to sanctions by threatening a cut to energy exports. The eurozone depends on imports from Russia for 40% of its natural gas, and Russia often uses its oil wealth as a “big stick” motivator. However, the constant threat is wearing thin, and the Group of Seven is developing policies to reduce European dependence on Russian energy.

The Continent produces little from its own fields, and non-conventional drilling (namely, fracking) is banned or under moratorium in many countries. Still, the Energy Information Administration (EIA) estimates Europe’s recoverable reserves of natural gas at as much as 600 trillion cubic feet (Tcf), compared with the region’s annual demand of 18 Tcf. The International Association of Oil & Gas Producers estimates that Europe could create 1.1 million jobs and significantly reduce its dependence on Russia if it were to explore its own fields more aggressively.

	Flickr/jonathanmcintosh
	Few companies are as well positioned to take advantage of future growth in European natural gas production as Chevron

Few companies are as well positioned to take advantage of future growth in European natural gas production as Chevron (NYSE: CVX). The company plans to invest nearly $600 million over the next 15 years in Romania alone. Chevron has been awarded exploratory permits in Ukraine and is partnering with a domestic Polish company to evaluate resources. Bulgaria, which has recently softened its stand on fracking, granted Chevron a permit to explore the country’s estimated 17 Tcf of gas reserves.

As tensions escalate with Russia, look for more calls for exploration — and for Chevron to win more projects.

Beyond the upside from European gas, Chevron is a strong long-term investment in the U.S. energy independence story. The company is coming off a period of huge capital expenditures on liquefied natural gas (LNG) and heavy oil projects but should see these projects start to generate cash flow in 2015. 

The company’s capital spending totaled nearly $38 billion last year, 22% higher than in 2012 and almost double its 2010 total. Its massive Gorgon LNG project in Australia is 80% complete and on track for mid-2015, and the deepwater Tubular Bells development in the Gulf of Mexico is about 90% complete. Management expects cash flow from operations to nearly double to $65 billion by 2020 from $35 billion last year.

With a yield of 3.4% and a growth rate of 11.6% over the past three years, Chevron is a strong dividend payer. The payout ratio is just 39%, leaving plenty of cash for growth or for future dividend increases. Chevron has been paying a dividend for over a century and is on a 19-year streak of increases. 

My one-year target of $140 is 12% higher than the current price, but it’s misleading because the real value of the shares is as a “Forever Stock.” Shares have returned an annualized 13.4% over the past 30 years, making Chevron a good addition to any retirement portfolio.

Risks to Consider: As a multinational energy company, Chevron is exposed to a number of geopolitical risks as well as the price of the commodities it supplies. These, along with the risk of an environmental incident, are unforeseeable, and investors need to keep a long-term view when shares fall on short-term events. 

Action to Take –> Chevron has one of the largest global footprints of the major oil companies and is poised to benefit from European demand in the future. Set this one on your list of regular buys, and your retirement portfolio will thank you.

P.S. My colleague Dave Forest and his staff recently went looking for the absolute best stocks on the market. The goal: Find stocks good enough to buy, forget about and hold — forever. After six months and $1.3 million worth of research, the team was successful. To learn more about the “Forever Stocks” that they uncovered — including some names and ticker symbols — click here.