Chevron: Momentum Continues Despite Chavez

| About: Chevron Corporation (CVX)
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Buy the common shares of Chevron Corporation (NYSE:CVX) for appreciation potential of 24% to estimated net present value [NPV] of $92 a share, which depends first on crude oil production (59%), second on refined products (27%), and third on natural gas (14%).

Estimated NPV essentially includes no value for Venezuela as the total for the company is some $10 a share less than that implied by correlation with thirty producers. Chairman Dave O’Reilly on the quarterly earnings call on February 2 remained a statesman in expressing his openness to negotiation with Mr. Chavez who has assumed dictatorial powers in the oil producing country.

Another political threat back home in California last fall was defeated when voters turned down an onerous tax on oil. Meanwhile, Chevron stock continues to gain investor favor indicated by a price above a rising 200-day average. Prospects could be further strengthened if oil for delivery over the next six years, priced currently at $64 a barrel, resumes an uptrend by crossing above the 40-week average later in 2007.

We favor CVX stock at a double weighting in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean fuel for global growth.

Originally published on Feb. 5, 2007

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