Offshore workers examine hydrocarbon samples aboard the Chevron Corp. Jack/St. Malo deepwater oil platform in the Gulf of Mexico off the coast of Louisiana, U.S., on Friday, May 18, 2018.

Bank of America Merrill Lynch is getting less optimistic on Chevron shares due to rising competition over energy deals.

The firm lowered its rating to neutral from buy for Chevron shares, saying the renewals for the company's key Asian projects may be more difficult than expected.

Analyst Doug Leggate explained his downgrade in a note to clients Thursday by pointing to the company's "emerging uncertainties around spending and PSC [production sharing contract] renewals [and] a more selective sector view that acknowledges the tailwind from the commodity as largely played out."

Leggate reduced his price target to $135 from $150 for Chevron shares, representing 13.5 percent upside to Wednesday's close.

Chevron shares are down 5 percent so far this year through Wednesday versus the S&P 500's 8 percent gain.

The analyst said multiple "key production sharing contracts" for the company expire in 2021 through 2023 and are up for renewal. He noted bidding for Chevron's natural gas contracts in Thailand is especially competitive. The projects expire in 2022 and represent 8 percent of the company's production.

"More significant is the current bidding process for Contract areas 1-3 in Thailand," he said. "CVX may win out, but with bids from five different parties submitted with more onerous terms than the legacy contract, our understanding is that CVX will not win at any cost."

Chevron did not immediately respond to a request for comment.