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Chevron Is Still In A Lot Of Trouble

Jul. 12, 2017 9:36 AM ETChevron Corporation (CVX)37 Comments


  • CVX has issued tens of billions of dollars in new debt in recent years.
  • However, it hasn’t funded anything that can support growth; it funded keeping the lights on.
  • CVX’ balance sheet is getting worse by the year and this is yet another reason to sell the stock.

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I’ve been pretty critical of Chevron (NYSE:CVX) recently because the company’s fundamentals, to put it bluntly, are inferior to that of XOM and just about any other mega-cap I can think of. Chevron has struggled enormously in the past couple of years with not only earnings but free cash flow as well and despite huge reductions in capex, it is still in a bad spot. That has led it to issue tremendous amounts of new debt and in this article, I’ll take a look at not only how much Chevron has begun to use debt but also the implications of such usage going forward.

I’ll be using data from company filings for this exercise.

Let’s first begin by taking a look at what CVX has done with both short and long term debt over the past five years, which encompasses some “normal” years for CVX as well as the turmoil of 2015 and 2016.

One thing CVX has done a lot of in the past few years – good times or not – is increase its usage of debt. LT debt was $12B in 2012 and has risen to better than $35B at the end of 2016. Short term debt was basically nothing in 2012 but usage of that has increased exponentially and sat at almost $11B at the end of last year. In total, between ST and LT debt, CVX went from just over $12B in 2012 to more than $46B by the end of last year. That’s enormous growth in obligations for any company and in particular, for one that has struggled as mightily as CVX in terms of operating profit and FCF.

Unsurprisingly, we can see interest costs have risen right alongside outstanding debt. Thankfully, ST debt is generally cheaper to service than LT debt so interest costs

This article was written by

Josh Arnold profile picture
Leader of Timely Trader
Maximize your gains through live trading with alerts ahead of market trends

I've been covering financial markets for ten years, using a combination of technical and fundamental analysis to identify potential winners (and losers) early, particularly when it comes to growth stocks.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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