Chevron, A Dividend Champion In Trouble: What Is The Impact Of The Ecuadorian Judgment?
Caiman Valores • 52 Comments
Caiman Valores • 52 Comments
Jul. 22, 2015, 2:56 PM
- In contrast to his upbeat analysis (I, II) of Exxon Mobil (XOM +1.2%), Goldman's Neil Mehta thinks investors should sell Chevron (CVX -0.2%) and Cenovus Energy (CVE -2.2%) on concerns about dividend sustainability.
- Believing too many investors are focusing on absolute yield when an ability to post dividend growth is more important long term, the analyst ranks CVX a Sell given low dividend growth, weak free cash flow and E&P volume risk, while CVE is a Sell because of limited dividend growth, lower returns and a premium valuation.
- XOM and Suncor Energy (SU -0.4%), on the other hand, "are set to deliver the highest dividend growth through the end of the decade - and now offer solid valuation upside from current levels."
Jul. 22, 2015, 10:58 AM
- More on Goldman Sachs' addition of Exxon Mobil (XOM +0.7%) to its Conviction Buy list: Analyst Neil Mehta thinks the company is positioned to outperform the sector and calls the company a "rare dividend/FCF growth story among big oils."
- Metha highlights four key positives: improving free cash flow, driving premium dividend growth; an inflection in production growth; strong refining earnings improvement driven by higher global crack spreads; and investor positioning, with many large cap portfolio managers still meaningfully underweight the stock.
- The analyst expects free cash flow will ramp from $9B at $57/bbl Brent in 2015 to $19B in 2017 at $65/bbl Brent, as capex decreases and volumes improve, and believes XOM can raise its dividend, on average, by 6% through 2017 vs. zero improvement for ConocoPhillips (COP -0.7%) and just 1% for Chevron (CVX +0.3%).
Jul. 20, 2015, 2:54 PM
- Chevron (CVX -0.2%) faces a potential new round of strikes at the Gorgon liquefied natural gas project in Western Australia after unions won official approval to ballot workers on a potential strike.
- The move risks further delaying the start of production at the project, Australia's biggest single resources venture, beyond its H2 2015 target which already has slid by more than a year from the original schedule.
- Regulators ruled Friday that various unions could hold a protected ballot of employees of U.S. engineering company CB&I (CBI +0.8%), which is fulfilling a $2.3B contract on mechanical, electrical and instrumentation work at the onshore LNG plant under construction.
Jul. 17, 2015, 3:26 PM
- ConocoPhillips’ (COP -1%) cancellation of a contract with Ensco (ESV -5.9%) "calls backlog sanctity into question for offshore drillers," raising uncertainty about contracted newbuild rigs even though COP has been vocal about tightening offshore exploratory spending since March, J.P. Morgan analyst Sean Meakim writes.
- Backlog uncertainty will remain an overhang until major operators prove commitment to their drilling programs, and exposure to Petrobras (PBR -5.4%), Shell (RDS.A -0.1%) and Chevron (CVX -1.1%) could serve as a headwind until the binary risk to contracts is resolved through dayrate renegotiations or terminations, according to Meakim.
- The firm maintain a negative outlook on the offshore drillers, with an Underweight rating on ESV, Noble Corp. (NE -4.3%) and Transocean (RIG -7.1%).
- Earlier: Offshore drillers under heavy pressure
Jul. 15, 2015, 5:57 PM
- The oil market "could be oversupplied for longer than we previously anticipated,” Jefferies analysts say, while highlighting Chevron (NYSE:CVX), Occidental Petroleum (NYSE:OXY) and Marathon Oil (NYSE:MRO) are their energy sector favorites.
- The firm likes CVX because of "one of the strongest balance sheets in the sector," with capital spending probably peaking this year at $35B and leverage expected to peak at 16% as major capital projects are delivered; production growth should average 6.4% in 2015-17, "a pace that generally drives an integrated oil company to outperformance."
- OXY's defensive characteristics - a strong balance sheet and progressive dividend - remain attractive, and the transformation of the stock to a Permian growth story is now materializing, Jefferies says.
- The firm expects MRO can grow production mid-single digit through at least 2018, while trading well below peers at 4.9x EV/DACF based on 2017 estimates.
Jul. 15, 2015, 2:22 PM
- Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and Total (NYSE:TOT) all passed on the first 14 shallow-water oil blocks auctioned by Mexico today in the country’s first-ever sale of territory in the Gulf of Mexico.
- Only one of Mexico’s first five oil blocks auctioned received a qualifying bid, as a consortium of Mexico's Sierra Oil & Gas, Talos Energy and Premier Oil (OTC:PMOIF) won block no. 2 after the first block did not receive a bid.
- A combined offer from Murphy Oil and Petronas was the sole bid on block. no. 3 but it was disqualified because it missed the country's required 40% minimum take.
- The tender was the first of five in what Mexico calls Round One, which also will include subsequent auctions for onshore reserves, deepwater oil, and non-conventional reserves such as those found in shale rock formations.
Jul. 11, 2015, 9:10 AM
- The two newsletter writers with the best track record of predicting oil market moves say the bottom is near, and crude prices should rise significantly in the next few years, Mark Hulbert reports in Barron's.
- Jim Stack of InvesTech Research thinks global oversupply will lessen in coming months, as U.S. drilling rig counts are down by more than half since late last year; technically, he is impressed with oil’s successful retest in March of its January low, and says the outlook will improve even more if oil remains above its March lows through August.
- Kelley Wright of Investment Quality Trends believes that, so long as the focus is on blue-chip companies with strong financials, the dividend yield is a reliable guide to over- and under-valuation; among blue-chip energy stocks he says are undervalued since their yields now trade near the high end of their historical ranges are XOM, CVX and SLB.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
Jul. 9, 2015, 7:21 PM
- Bloomberg's Carl Pope makes the case that the largest publicly traded oil companies face a problem that will only grow worse with time: Dependence on ever higher oil prices to match their ever higher costs of discovery.
- Pope notes that publicly traded oil and gas companies have access to only 10% of the world’s oil reserves, and those reserves increasingly are located in areas that are among the most difficult and expensive to extract; meanwhile, more accessible, inexpensive crude reserves in places like Russia and the Persian Gulf are set aside by governments for their own national oil companies.
- The columnist notes that the percentage of Exxon’s (NYSE:XOM) proven reserves made up of tar sands and heavy oil increased from 15% in 2006 to 32% by 2013, and relying on a larger share of more expensive oil has worn on XOM's margins and returns.
- Other relevant tickers: CVX, COP, BP, RDS.A, RDS.B, TOT, E
- ETFs: XOP, IEO, PXE, NDP, GUSH, DRIP
Jul. 7, 2015, 6:43 PM
- Barclays’ Paul Cheng predicts all 10 Americas-based oil majors - XOM, CVX, COP, HES, MUR, SU, CVE, IMO, OTCPK:HUSKF, PBR - will beat earnings forecasts, benefiting from strong downstream and chemical performances as well as better than expected production volumes and a lower operating cost environment.
- Cheng estimates the oil majors will exceed the current EPS consensus by a median of 30% while the refiners will beat by 9%.
- Cheng raises his full-year EPS forecast for CVX to $3.75 from $3.55 and for COP to $0.25 from $0.20, but lowers his forecast for XOM to $4 from $4.05.
Jul. 7, 2015, 5:58 PM
- Some Japanese have warned that they are unlikely to take up test shipments from Chevron's (NYSE:CVX) $54B Gorgon LNG project, which would force the project to dump chunks of its early production onto an already saturated global spot market, Reuters reports.
- This would be the latest blow to Gorgon, already the world's most expensive liquefied natural gas project, which has been hit by billions of dollars in cost overruns.
- Japanese buyers holding long-term supply contracts in the past have eagerly sought early cargoes, but some could pass on the test shipments with long-term prices well above spot prices languishing at four-year lows.
- "At this point there is no plan," said a Tokyo Gas spokesman when asked whether it planned to take the first of the test cargoes; another Japanese client reportedly said "If there's spot supply that's cheaper than Chevron's offer price, then we'll not take from Chevron."
Jul. 6, 2015, 3:15 PM
- WTI crude oil settled at a three-month low $52.53/bbl, -7.7%, on a confluence of worries about the Greece debt drama, China’s stock markets and a new flood of Iranian oil; Brent crude fell to $56.50, -6.3%, to snap its 100-day MA.
- WTI has dropped 10% over three straight sessions and Brent more than 7% lower in two consecutive days, breaking out of the narrow trading band of the past three months and risking a deeper slide ahead.
- The energy sector (XLE -1.3%) is easily the worst performing equity group today: CLR -7.4%, NOG -7.8%, OAS -8.5%, DNR -6.7%, WLL -6%.
- Oil supermajors also are sharply lower: XOM -1%, COP -2.8%, CVX -1.1%, BP -3.3%, TOT -3%.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, TWTI, OLEM
Jun. 25, 2015, 12:17 PM
- Penn Virginia (PVA +7.8%) spikes higher after a report that BP (BP +0.3%) has offered $8/share in a takeover bid for the company, and that PVA has hired BofA to help it search for potential buyers.
- PVA is said to have rejected the offer because it believes the terms offered undervalue the company, and is holding out for at least $10/share, according to U.K. publication Proactive Investors.
- BP rivals such as Exxon Mobil (XOM -0.1%) and Chevron (CVX -0.1%) also may be interested in buying PVA, the report says.
Jun. 24, 2015, 12:54 PM
- Chevron (CVX +0.1%) says it is selling its 40% stakes in two more Nigerian shallow water offshore oil blocks in the Niger Delta area, just after completing the sale of its 40% interests in two other Nigerian shallow water blocks.
- Oil theft, pipeline vandalism and uncertainty over taxes in Nigeria's proposed oil bill has been holding back billions of dollars in investment, especially in capital-intensive deepwater offshore blocks.
- Financial terms are not disclosed.
Jun. 19, 2015, 12:48 PM
- The bad news facing offshore drillers such as Transocean (RIG -1.4%), Seadrill (SDRL -2%), Ensco (ESV -1.2%) and Noble Corp. (NE -2.3%) convince Wells Fargo to remain bearish on the sector.
- The firm says the last 48 hours have produced a "golden sombrero" for the offshore drilling sector with Hercules Offshore filing for bankruptcy, Chevron (CVX -0.6%) reportedly canceling a high profile ultra-deepwater tender in the Gulf of Mexico, and ESV and NE each disclosing notably negative fleet status reports.
- Wells rates ESV and NE at Market Perform, but RIG and SDRL are rated Underperform; RIG faces “significant risk to global floater market deterioration and funding risk balancing newbuild payments and debt maturities," while SDRL's high quality fleet is outweighed by "significant funding risk for debt repayments and newbuild commitments.”
Jun. 19, 2015, 10:28 AM
- Chevron (CVX -0.3%) is maintained with a Sell rating at Goldman Sachs, which also lowers its stock price target to $97 from $99 and its earnings estimates following the company's production announcements through the past month.
- The firm also foresees sluggish dividend growth for CVX, and says "oil investors need to focus on dividend growth and not dividend yield, especially in a scenario where interest rates rise."
- CVX is unlikely to be able to generate enough cash flow to be able to grow dividends beyond 2%/year, Goldman says, given its expectations for 2016-18 Brent oil prices; the firm also sees risk to achieving CVX's 2017 production guidance.
Jun. 18, 2015, 12:58 PM
- PetroVietnam says it has acquired all of Chevron's (CVX +0.7%) Vietnamese assets for an undisclosed sum, which the state-run company says will help accelerate field development to raise output of natural gas.
- PetroVietnam says it will take over CVX's stakes in three offshore blocks and in a natural gas pipeline project linking them to southern Vietnam.
- The move follows a recent downward adjustment by the country of its energy reserves for this year due to the slump in global oil prices.
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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