Chevron, A Dividend Champion In Trouble: What Is The Impact Of The Ecuadorian Judgment?
Caiman Valores • 52 Comments
Caiman Valores • 52 Comments
Sep. 3, 2015, 3:58 PM
- Chevron (CVX +0.3%) backs one of its legal foes into submission, as litigation consultancy H5, which had joined forces with U.S. plaintiffs' lawyers to attack CVX over oil contamination in Ecuador, says it is withdrawing from the conflict and assigning its 1.25% interest in a pending $9.5B Ecuadorian judgment to the company.
- Denying any wrongdoing and saying it had acted in good faith, H5 says it settled with CVX after reviewing the 2014 ruling by a U.S. district court judge who determined the Ecuadorian litigation had devolved into an extortion conspiracy against the company.
Sep. 1, 2015, 3:58 PM
- Citigroup's energy analysts defend their bullish take on big oil stocks such as ConocoPhillips (COP -2.6%), Total (TOT -2.1%) and Statoil (STO -4.5%), pointing to 30-year valuation lows, upside asymmetric risk on oil prices and signs that managements are doing enough to turn the corner on better capital allocation and cost-cutting.
- Favoring COP, TOT and STO, the firm says its sector investment criteria are (1) growth - companies that have near-term growth are less reliant on simply cutting costs; (2) better capital allocation - combined with growth, it should deliver 2-3x the ROE uplift than cost-cutting can; and (3) a strong enough balance sheet to manage the early part of the cycle.
- Citi is staying away from Exxon Mobil (XOM -4%) because of its valuation premium to peers and low growth and from Chevron (CVX -3.2%) due to its slow response in a lower commodity world.
Aug. 31, 2015, 3:49 PM
- West Texas crude oil surged 8.8% to $49.19/bbl, capping a three-day rally that added more than 27% to the price - the largest three-day rally since January 2009 - after U.S. oil production data showed output falling and OPEC said it would talk with other producers about low prices.
- Brent crude rallied 7.4% to $53.80, as the spread between the two benchmarks widened to more than $5 intraday after narrowing to $4.33.
- "Oil markets are hungry for any evidence of a fall in production, anywhere,” says Global Hunter's Robert Hastings.
- The SPDR Energy ETF (XLE +1.2%) jumped after being down as much as 2.5% early in the day, and the Market Vectors Oil Services ETF (OIH +2.3%) reversed a 2.6% loss at its intraday low.
- However, trading volumes were lower and volatility perhaps greater than usual due to a U.K. holiday.
- Andrew Keene tells CNBC he is selling today's pop, noting that XLE is again trading at its 20-day MA and "we haven't traded above this moving average since May."
- Among the shares of some of the more active energy companies, Chevron (CVX +0.5%) and Exxon Mobil (XOM +0.4%) are higher after respective early losses of 3.1% and 2.4%; also, COP +5%, PSX +2.6%, SLB +2.2%, RIG +4.1%, HAL +2.4%, WLL +8.3%, MRO +3.4%, NFX +5.1%, LINE +5.7%.
- Other ETFs: VDE, ERX, XOP, ERY, FCG, DIG, GASL, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
Aug. 25, 2015, 7:05 PM
- Dividends of oil E&P companies such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Anadarko Petroleum (NYSE:APC) and Occidental Petroleum (NYSE:OXY) are “mostly safe" in the shaky commodity landscape despite Chesapeake Energy’s decision to suspend its payout, says Raymond James' Pavel Molchanov and his analyst team.
- Although the firm projects only one company - APC - out of 18 to fully cover the 2016 dividend payout out of cash flow at strip pricing, dividends likely will not be cut since "all the companies that have a healthy balance sheet today should still have a healthy balance sheet at the end of 2016, even if they maintain the current dividend."
- The only dividend payers with a current net debt/cap ratio above 50% are DNR and CRC - a red flag, but both companies’ dividend payouts represent quite small amounts of outlays relative to cash flow, the firm says, adding that the only companies whose leverage is likely to be lower at year-end 2016 than it was in Q2 2015 are HES and QEP.
- Among large-caps, the highest current leverage is at APC, at 45%, and NBL, at 38%, while the companies with the lowest current leverage are CVX, OXY and XOM, all at 15% or lower.
Aug. 24, 2015, 3:27 PM
- Chevron (CVX -5%) is upgraded to Neutral from Underperform with a $100 price target at BofA Merrill, which expects CVX’s net debt to stabilize with major projects beginning to contribute in 2017 and a drop in spending to maintenance levels.
- The firm says it has been concerned throughout the past year that CVX's cash burn would dilute equity value through peak spending at the same time that oil prices collapsed, but it no longer sees a risk, as CVX is discounting below strip prices but with a dividend.
- CVX requires sustained spending of $15B-$16B to hold production flat for an extended period,” BofA's Doug Leggate explains, adding that at $45-$50 oil, cash flow by 2017 would be closer to $29B so that the dividend is "more than covered" by cash flow in an ex-growth environment.
- ConocoPhillips (COP -6.2%) is the firm's top pick among the big oils after the stock has been hit hard, which the analyst thinks reflected unwarranted concerns regarding COP's dividend; at current strip prices, Leggate believes COP's upside is second only to Buy-rated Exxon Mobil (XOM -5.3%).
- However, the firm downgrades HollyFrontier (HFC -3.5%), Marathon Petroleum (MPC -7.2%) and Valero (VLO -4.7%) to Underperform and cuts Continental Resources (CLR -10.1%), Marathon Oil (MRO -8.4%), Noble Energy (NBL -5.4%) and Whiting Petroleum (WLL -8%) to Neutral.
Aug. 21, 2015, 1:31 PM
- WTI crude dips below $40 for the first time since 2009 on major concerns over demand from China and a Baker Hughes report indicating producers increased their rig count for the 5th straight week.
- WTI crude traded as low as $39.86.
- Oil majors are down slightly more than broad market averages on the day. Notable decliners include Exxon Mobil (NYSE:XOM) -1.4%, Chevron (NYSE:CVX) -2.5%, Royal Dutch Shell (NYSE:RDS.A) -2.7%, Phillips 66 (NYSE:PSX) -4.5%, and ConocoPhillips -2.1%.
- Related ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
Aug. 21, 2015, 12:34 PM
- "It's worse than you think," says longtime China bear Jim Chanos, having a day on CNBC. "Whatever you might think, it's worse."
- "People are beginning to realize the Chinese government is not omnipotent and omniscient ... like many of us, sometimes they don't have a clue."
- Chanos is short Solar City (SCTY -8.9%), saying it's really a subprime finance company, burning a lot of cash, and with negative EBITDA ... "this environment ... scary."
- He remains short some of the bigger names in the energy exploration and production space - DVN, MRO, OXY, APC.
- I don't like Shell (RDS.A -1.8%) or Chevron (CVX -1.5%), he says, and believes neither Chevron's dividend nor its buyback are safe.
- ETFs: FXI, ASHR, CAF, YINN, PGJ, GXC, FXP, YANG, CHN, PEK, MCHI, TDF, XPP, YAO, GCH, ASHS, YXI, CN, CHXF, FCA, CNXT, CHNA, KBA, JFC, AFTY, CHAU, XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Aug. 19, 2015, 11:18 AM
- It's a broad decline for stocks this morning, with the S&P 500, DJIA, and Nasdaq all lower by 1% or more. Leading the way down are the energy names (XLE -2.5%) after an unexpected jump in oil inventories has sent the price of black gold down to new bear market lows at $41.30 per barrel.
- Chevron (CVX -2.9%), ConocoPhillips (COP -3.8%), EOG Resources (EOG -4.3%), Apache (APA -4.1%), Hess (HES -3.6%), Marathon Oil (MRO -5.5%), Noble Energy (NBL -3.1%), Anadarko (APC -3.6%).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Aug. 18, 2015, 11:47 AM
- Having been "multi-year cautious" on Big Oil, Citigroup's Alastair Syme is getting more bullish, believing current valuations are giving very little chance to the restoration of the group's long-term profitability to long-run averages.
- He notes the sector price-to-book ratio of 1.2x is now below the Q1 2009 and Q4 1998 troughs, even with books marked to reflect world oil in the $50-$70 range.
- "This will be a long process, but the repair (cost-cutting, better capital allocation) has now started," says Syme, recommending investors at least get to benchmark weight in the group. His favored ways to play are ConocoPhillips (NYSE:COP), Statoil (NYSE:STO), Total (NYSE:TOT), and BG Group (OTCQX:BRGYY) as a cheaper way to get into Shell (NYSE:RDS.A).
- Notably not on the list are ExxonMobil (NYSE:XOM) thanks to its valuation premium and low growth (through the strong balance sheet is worth a look), and Chevron (NYSE:CVX) - "slow to adjust to a lower commodity world."
- Previously: BAML: Capitulation in emerging markets, commodities, and energy-related stocks (Aug. 18)
Aug. 18, 2015, 9:28 AM
- A reduction in output by nearly one-third at Chevron's (NYSE:CVX) 110K barrel per day South African refinery is due to a mechanical fault, according to a company spokesperson.
- Possible supply disruptions are on tap for petrol, diesel, and liquified petroleum gas.
- "We are therefore implementing all the necessary measures, including securing contingency product supplies of petrol and diesel to address potential shortfalls."
- Source: Reuters
Aug. 14, 2015, 12:47 PM
- The Obama administration will allow limited sales of crude oil to Mexico for the first time, Reuters reports, citing a senior administration official who says the U.S. Commerce Department is "acting favorably on a number of applications" to export U.S. crude in exchange for imported Mexican oil.
- The shipments, likely to be lighter, high-quality shale oil, would help Mexico's aging refineries produce more premium fuels, while U.S. refiners would continue to get Mexican heavy oil, a better match for them than the light oil coming from Texas and North Dakota.
- Although limited in scope, the move toward freeing up trade will please U.S. oil producers such as Pioneer Natural Resources (NYSE:PXD) and ConocoPhillips (NYSE:COP), which say the restrictions force them to sell oil at below global market rates, and may add momentum to efforts mostly to repeal what advocates see as a relic of the 1970s.
- Among relevant oil stocks: XOM, CVX, BP, RDS.A, RDS.B, OAS, NOG, CLR, WLL, EOX, SM, SFY, PVA, GST, SN, CRK, BBG, CWEI
- Relevant refining stocks: VLO, HFC, MPC, TSO, WNR, ALJ, PSX, PBF, DK, NTI, ALDW
- ETFs: XLE, XOP, XES, IEO, IEZ, PXE, NDP
Aug. 13, 2015, 8:25 AM
- Iron ore shipments to China have been disrupted after yesterday's deadly explosions at Tianjin’s port - the world's 10th largest - caused authorities to restrict vessels calling at the facility.
- Mills in China are the world’s largest buyers of iron ore and the blasts, which have killed at least 44 people, will prompt shippers, traders and users to tap stockpiles and seek alternative routes.
- BHP Billiton (NYSE:BHP) says its iron ore operations at the port have been disrupted but that there was no damage to iron ore discharging berths; BHP does not own or operate any iron ore berths at Tianjin, but the port does receive its shipments along with those of other iron ore miners.
- Fortescue Metals (OTCPK:FSUMF) also says its iron ore operations at the port have been affected, while Rio Tinto (NYSE:RIO) has not provided details of any potential damage.
- Also, Chevron (NYSE:CVX) says it suspended operations at a nearby lubricants facility but that the plant did not sustain immediate visible damage.
- Iron ore futures in China jumped nearly 4% to their highest in more than five weeks.
- Tianjin handled 25M tons of iron ore imports in H1 of this year, or 5.5% of China’s total, and shipped out ~30% of the country’s steel exports in the period.
Aug. 11, 2015, 10:59 AM
- Many oil companies have been hit hard by low crude prices, but Chevron (CVX -2.4%) also is battling its own expansion ambitions, and some analysts say CVX should abandon its goal of tapping 3.1M bbl/day of oil and gas by 2017, WSJ's Daniel Gilbert writes.
- CVX’s stock price has underperformed Exxon Mobil (XOM -1.7%) and Royal Dutch Shell (RDS.A -0.6%) over the past year after topping them during the previous five years and betting more than them on huge energy projects such as the $54B Gorgon natural gas export plant in Australia.
- "The most important thing to preserve is value,” said IHS Energy's Lysle Brinker, and "if it means they have to sell some of their crown jewels, or small slivers of them, to raise billions of dollars and help maintain the balance sheet and the dividend, that’s what they should do."
Aug. 11, 2015, 8:23 AM
- ConocoPhillips (NYSE:COP) is reviewing its oil and gas portfolio in Indonesia and may seek buyers for a stake in a production sharing block it operates in the Natuna Sea, Reuters reports.
- The country's upstream oil and gas regulator says COP has requested to open its data room for the block, adding that such requests typically were made by companies "that want to farm out their participating interests."
- COP holds a 40% interest in South Natuna Sea Block B, and other companies with participating interests are Chevron (NYSE:CVX), with 25%, and Japan's Inpex, with 35%.
Aug. 4, 2015, 11:59 AM
- A U.S. appeals court rejects Ecuador's challenge to a $96M international arbitration award in favor of Chevron (CVX -0.1%), the latest development in a long dispute over the development of oil fields in the South American country.
- The D.C. Circuit Court of Appeals upholds an award rendered by a panel at The Hague's Permanent Court of Arbitration, after CVX claimed Ecuador had violated an international treaty by failing to resolve lawsuits over commercial disputes between the two sides in a timely manner.
Aug. 3, 2015, 3:50 PM
- Chevron (CVX -3.4%) continues to suffer analysts' wrath after disappointing Q2 results, as Barclays reiterates its Equal Weight rating on the stock but lowers its price target to $99 from $110, believing the “wave of development delays and outages” will hurt CVX in the near-term.
- The firm also notes that CVX's stronger production volumes in Q2 did not translate to higher upstream earnings and its cash flow remains a source of disappointment and concern.
- Last Friday, CVX was cut to Hold from Buy with a $96 12-month price target, cut from $125, at S&P Capital IQ.
- Barclays also lowers its price target on ConocoPhillips (COP -1.2%) to $64 from $75, pointing out the while COP reported a strong operational quarter, financial performance was challenged and cash flow neutrality remains a concern among investors (Briefing.com).
Chevron Corp. is an integrated energy company, which provides administrative, financial, management and technology support to U.S. and international subsidiaries that engage in fully integrated petroleum operations, chemicals operations, mining operations, power generation and energy services.... More
Sector: Basic Materials
Industry: Major Integrated Oil & Gas
Country: United States
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