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Dec. 2, 2015, 12:24 PM
- Chevron (CVX -2%) is upgraded to Buy from Neutral with a $110 price target at Citigroup, which has a favorable view of the company's capital allocation and free cash flow gains.
- CVX has outlined steps to achieve cash flow neutrality by 2017 that include spending cuts, asset sales and additional borrowing, and Citi analyst Alastair Syme sees “a forward growth trajectory that should give CVX real leverage around improving" free cash flow and return on equity, and expects medium-term dividend growth.
- Although growth delivery remains heavily dependent on two projects - Gorgon and Wheatstone - Citi believes both are now largely de-risked from an execution standpoint.
- Shares nevertheless are lower after U.S. stockpile data sent crude oil prices diving below $41/bbl.
Dec. 1, 2015, 6:55 PM
- The world's oil companies have canceled or delayed final investment decisions on ~150 projects that could wipe out 19M bbl/day from the world’s hydrocarbons and stay underground for several years longer than expected amid lower crude oil prices, according to a new report from Tudor Pickering Holt.
- Canada and Norway top the investment bank’s list of deferred projects by country, while surprisingly few deepwater projects have been deferred in the Gulf of Mexico and Brazil.
- The biggest oil companies account for a third of the 150 projects Tudor Pickering says have been delayed or canceled, a scale that “suggests that companies will have real growth issues toward the end of the decade,” and some will have to buy smaller rivals to make up for it.
- BP and Chevron (NYSE:CVX) have deferred the largest number of projects, while Exxon (NYSE:XOM) could delay the most oil barrels (~2.5M bbl/day of production capacity from 25 projects); Royal Dutch Shell (RDS.A, RDS.B) is deferring 1.7M bbl/day, but its deal to buy BG Group and its deepwater fields off Brazil has alleviated many of the growth issues it might otherwise face.
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, IXC, FENY, PXE, IPW, PXJ, FIF, NDP, RYE, FXN, GNAT, SZC, DDG, FILL
Dec. 1, 2015, 7:09 AM| Dec. 1, 2015, 7:09 AM
- November monthly performance was: +0.26%
- 52-week performance vs. the S&P 500 is: -4%
- $0.16 in dividends were paid in November
- Top 10 Holdings as of 10/30/2015: Apple Inc (AAPL): 3.52%, Microsoft Corp (MSFT): 3.36%, Exxon Mobil Corporation (XOM): 3.27%, General Electric Co (GE): 3.01%, AT&T Inc (T): 2.91%, Verizon Communications Inc (VZ): 2.75%, Johnson & Johnson (JNJ): 2.22%, Wells Fargo & Co (WFC): 2.15%, Chevron Corp (CVX): 2.1%, Pfizer Inc (PFE): 2.1%
Nov. 20, 2015, 10:53 AM
- Production from Argentina's Vaca Muerta shale play is expected to double by 2018, according to a new development study by Wood Mackenzie.
- The study says oil and gas output from the play will be moderate in 2016, with a Y/Y production increase of 10%, but the increase will see a sharp upturn by 2020.
- The consultant sees ~200 wells brought online in the region in 2015, with fewer in 2016 as vertical wells are phased down.
- In order to fully develop Vaca Muerta, the study suggests that more joint venture deals will be necessary, as YPF will need outside assistance to develop the 6.3M acres it holds.
- Related tickers: XOM, CVX, RDS.A, RDS.B
Nov. 16, 2015, 6:53 PM
- Low crude prices have caused oil companies to cut spending but they are still protecting their hefty dividends, WSJ reports, as the four supermajors - Exxon (NYSE:XOM), Chevron (NYSE:CVX), Shell (RDS.A, RDS.B) and BP - have distributed nearly $28B to their shareholders YTD, ~10% more than the same period in 2014, and as their collective earnings have fallen by more than 70%.
- The payments to investors come amid $22B in reduced spending on exploration and development of oil fields, and 80 scrapped or delayed projects so far this year, according to BP E&P chief Lamar McKay.
- The supermajors have little choice but to pay fat dividends to keep investors, but it is a potentially risky strategy given concerns about the length of the oil price downturn and its impact on cash flow; dividend yields oil companies made last quarter are at the highest level in more than a decade, according to FactSet.
- But investors are hooked: CVX has increased its annual per-share dividend for each of the last 28 years, XOM has raised its dividend by an average of 6.4% every year for the last 33 years, and Shell and BP have reiterated that maintaining returns to shareholders is a priority.
Nov. 10, 2015, 3:37 PM
- Argentina's Supreme Court orders government-run YPF (YPF +1.5%) to disclose the details of an investment deal with Chevron (CVX +0.9%) to produce oil and gas by hydraulic fracturing in the Vaca Muerta shale deposit, dismissing claims that releasing confidential information could affect the development of the deal.
- Opposition politicians, environmental groups and others had criticized potential environmental problems and the government's refusal to release all of the contract's provisions; some have alleged the deal contains secret clauses that hand concessions to CVX and undermine national interests.
Nov. 9, 2015, 2:11 PM
- Chevron (CVX -1.5%) plans to lay off up to 1,000 employees working in the oil-rich neutral zone between Saudi Arabia and Kuwait, after a dispute between the two countries has halted all work on oil fields for several months, WSJ reports.
- The layoffs come less than two weeks after CVX Chairman/CEO John Watson expressed optimism that Kuwait would allow operations to continue while working out its dispute with Saudi Arabia.
- It is not clear whether the layoffs are part of the 6K-7K cuts CVX had announced on Oct. 30 when it reported lower Q3 earnings because of lower oil prices.
Nov. 9, 2015, 9:15 AM
- Chevron's (NYSE:CVX) Thailand refining unit plans an IPO of as much as $434M to repay some loans and fulfill its obligation to the government for a stock listing, Bloomberg reports.
- The IPO, which includes an offer of ~1B shares to local investors and 712M shares to international subscribers, will dilute CVX’s stake in Star Petroleum to 57.4%; CVX reserves the right to sell an additional 173.5M shares if investor demand exceeds the current allocation.
- Star Petroleum is the only unlisted Thai refiner that is majority owned by a foreign company, and the IPO will help it meet the condition under which it received the government’s license.
Nov. 6, 2015, 4:59 PM
- Royal Dutch Shell (RDS.A, RDS.B) unveils a $1.3B carbon capture storage project for Alberta, but says future efforts to curb greenhouse gases will continue to need financial support from governments.
- Shell CEO Ben van Beurden says carbon capture and storage projects need a $60-$80 price for carbon dioxide to justify building them, more than 5x the current price of C$15/ton (US$11.27) in Alberta.
- Shell’s Quest facility will extract 1M tons of the gas from its Scotford refinery each year, and the carbon dioxide will be injected into an underground saline formation ~50 miles from the plant - it is the first in North America to store CO2 in a deep saline formation.
- The governments of Alberta and Canada contributed $745M and $120M, respectively, to build the project that counts Shell (60%), Chevron (NYSE:CVX) and Marathon Oil (NYSE:MRO), each with 20%, as investors.
Nov. 6, 2015, 10:25 AM
- The New York attorney general's investigation of Exxon Mobil's (XOM -1.8%) record on climate change may prompt legal inquiries into other oil companies, NY Times reports, citing legal and climate experts.
- Prosecutors could decide to probe companies that funded or joined groups that questioned climate science or policies designed to address the problem to see if discrepancies exist between the companies’ public and private statements, according to the report.
- For example, internal documents discussing climate change from companies belonging to the Global Climate Coalition - including XOM, BP, Shell (RDS.A, RDS.B) and Texaco (now part of Chevron CVX) - could contradict what the companies said as part of the group, which disbanded in 2002.
- Energy experts say it would be harder to make cases against oil companies than it was against tobacco companies that deliberately hid research from their customers, since many oil company scientists, including those of XOM, have presented papers on climate change publicly at conferences and contributed to research of groups concerned with the issue.
Nov. 2, 2015, 3:58 PM
- Phillips 66 (PSX +1.7%) is downgraded to Neutral from Outperform with a $105 price target at Credit Suisse, which says that while PSX's post-earnings rally was “thoroughly deserved,” the current valuation already prices in the positives.
- Analyst Edward Westlake thinks PSX is the best positioned company in the group from a structural perspective, as it is exposed to the faster growth in the NGL and chemical business, and substantial self-help can be expected through H2 2016-18, possibly driving EBITDA over $9B in 2018; however, "at least some of this self-help is priced in” and that “there is greater refining leverage in other names.”
- While the rally in PSX calls for a reduced rating, Chevron’s (CVX +4.5%) capex cut underscores dividend sustainability and supports an upward revision in the price target, Westlake says.
Nov. 2, 2015, 2:45 PM
- Chevron (CVX +4.3%) continues its post-earnings rally after announcing first oil production from its operated Lianzi development off the coast of Congo-Brazzaville and Angola, and enjoying a couple of price target hikes from analysts.
- CVX says the project, which is expected to produce an average of 40K boe/day, is its first operated asset in Congo and the first cross-border oil development project offshore west central Africa.
- Shares also may be getting a lift from price target bumps to $100 from $87 by Credit Suisse and to $95 from $87 at UBS, which now estimates CVX can achieve cash flow neutrality at $55/bbl Brent crude, below the $70 target it had outlined in March.
Oct. 30, 2015, 3:04 PM
- Looking at things on a price-to-book basis, energy stocks are selling for just 55% of the broader S&P 500, according to a note this week from BAML - the lowest level since 1986. On average, energy has been 85% as expensive as the S&P.
- Book values can change, but do tend to be more stable than earnings - while ExxonMobil's EPS is expected to fall 45% this year, its book value is seen slipping just 1%.
- Jack Hough takes a look at three names trading at particularly large discounts:
- Chevron (CVX +1.5%) sells for 1.1x book vs. a 10-year average of 1.74x. Though cash flow has turned negative, JPMorgan's Phil Gresh says the risk of a dividend cut is "near zero."
- Apache (APA +1.2%) sells for 1.07x book vs. a 10-year average of 1.5x. The company has a recent market cap just under $18B, with $6.5B in available liquidity, including $3B in cash - putting it in position to buy assets on the cheap.
- Devon Energy (DVN +2%) sells for 0.88x book vs. its 10-year average of 1.47x. The profits are expected to fall by more than half this year, the company is growing production and cutting well costs in key properties.
Oct. 30, 2015, 8:47 AM
- Chevron (NYSE:CVX) moved up 1.1% premarket on a Q3 earnings report where profits contracted Y/Y but revenues beat expectations soundly and the company cut expenses.
- The upstream business eked out profit of $59M as international earnings of $662M mitigated a $603M loss in the U.S. Weaker market prices for both crude and natural gas affected results, though the company has cut operating and admin costs 7% Y/Y and is pursuing more cuts.
- Worldwide net oil-equivalent production was 2.54M barrels/day, down from the prior year's 2.57M.
- Downstream earnings of $2.21B were up sharply from a year-ago $1.39B.
- Cash flow from operations was $14.9B for the first nine months, down from a year-ago $25B. Capital and exploratory expenditures were $25.3B, down from a year-ago $29B. The company expects 2016 capital/exploratory expenditures at $25B-$28B, down about 25%.
- Webcast to come at 11 a.m. ET.
Oct. 30, 2015, 8:32 AM
- Chevron (NYSE:CVX): Q3 EPS of $1.09 beats by $0.33.
- Revenue of $34.3B (-37.3% Y/Y) beats by $4.54B.
- Shares +0.2% PM.
Oct. 29, 2015, 5:30 PM| Oct. 29, 2015, 5:30 PM | 19 Comments
Chevron Corp provides administrative, financial, management and technology support to U.S. & international subsidiaries that engage in fully integrated petroleum operations, chemicals operations, mining operations, and power and energy services.
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