Everyone always has an opinion about what someone else should do with all their money. And lately investor speculation has abounded about what Chevron Corp (NYSE: CVX) intends to do with the nearly $21.5 billion cash hoard on its balance sheet. With just under $9.8 billion in long-term debt, the supermajor could easily afford to go on an acquisition spree. Of course, many of the largest integrated oil companies boast substantial cash on their balance sheets, though with the exception of Exxon Mobil (NYSE: XOM), none have so much cash that it dwarfs their long-term debt.

Given Chevron’s robust portfolio of international assets, some industry watchers believe the energy giant might be interested in expanding its stake in domestic shale plays. Following Chevron’s acquisition of Atlas Energy in February 2011, the integrated energy giant’s holdings in the Marcellus and Utica Shale formations expanded to 700,000 acres and 600,000 acres, respectively. But despite its roughly 3 million net acres across 13 unconventional plays, the company still lags peers such as Exxon Mobil and Chesapeake Energy (NYSE: CHK) in establishing a truly major presence in North American shale.

As natural gas prices cratered, however, this relative shortcoming in Chevron’s portfolio of assets proved to be fortuitous. And now that the valuations of those firms most leveraged to shale plays have fallen in sympathy with gas prices, analysts expect merger and acquisition activity in formations such as the Bakken Shale to pick up substantially.

While Chesapeake’s major shareholders are lobbying the firm’s management to put the company up for sale, analysts expect Chevron to avoid the thorny issues that could emerge in a deal with Chesapeake in favor of smaller, bolt-on acquisitions. But there’s always the possibility that Chevron could forge a deal to acquire some of Chesapeake’s assets without having to swallow the company whole. Though as the “oiliest” of the major integrated energy companies, Chevron may opt for less gassy fare.

Other names that have been bandied about as possibilities include Hess (NYSE: HES), Continental Resources (NYSE: CLR) and Range Resources (NYSE: RRC). The first two firms have major stakes in the Bakken, while the latter firm has sizable holdings in the Marcellus.

Along those same lines, SunTrust Robinson analyst Neal Dingmann recently issued a research note that says companies operating in the Bakken remain undervalued and could be primary takeover targets for larger industry players. Among the handful of firms he identified as potential M&A prospects, Northern Oil and Gas (NYSE: NOG) and Oasis Petroleum (NYSE: OAS) were cited as having one of the lowest valuations in the Bakken on a per-acre leasehold basis, at $400 and $3,100, respectively. In fact, the analyst specified Northern Oil and Gas as the top play in the Bakken. Dingmann also see M&A potential in the Utica Shale, with Chevron suggested as being among the handful of companies that could be active acquirers there.

McMoRan Exploration (NYSE: MMR) could be another possibility. Last year, there was a rumor circulating that Chevron might offer $26 per share for the firm, with which it’s already partnered on a project in the Gulf of Mexico.

For now, Chevron’s management has demurred from stating how it will deploy its cash, arguing that it needs a liquidity cushion until it completes major projects, such as its $45.5 billion Gorgon liquefied natural gas project in Australia. That’s frustrated analysts who describe Chevron’s pile of cash as “dead capital,” especially since the company could easily tap the capital markets at extremely favorable rates should the need arise.

Even so, if a company must face criticism for how it chooses to allocate capital, it might as well be for having too much cash, so long as it eventually pursues a course of action that accretes value to shareholders.

What do you think of this article? Please post your feedback in the “comments” section below!