Don’t Miss the Chevron Opportunity

Chevron (CVX) is successfully increasing the percentage of superior margin barrels and this impressive volume growth is expanding their key operating cash flows with the company forecasted to deliver approximately $25 per BOE of average cash margin during 2017.

Chevron’s cost optimization efforts are targeted towards minimizing non-core expenditures while strategic investments in new growth opportunities to sustain healthy cash position and deliver outstanding shareholder returns. Going forward, Chevron is uniquely standardizing the growth opportunities, expanding scope and implementing optimization and re-engineering of the work processes.
Chevron has enhanced its balance sheet flexibility to over 8.0 billion by 2017 and it’s believed to have strong base business expansion opportunities.

More strength ahead

Chevron’s international long-term LNG supply and demand outlook with the key production by the year-end 2015 estimated to grow in 13% to 15% range to in between 2.9 million to 3 million barrels per day during 2017. In addition, Chevron expects to further increase the production volumes in 2018 as well primarily encouraged by several developmental projects in already in the pipeline.

Chevron is observed to be keenly focused on optimizing its daily operations by expanding the core upstream, midstream and downstream operations while minimizing the non-core expenditures to maintain healthy cash position amid tough key commodities demand and pricing environment to deliver growth while returning healthy shareholder returns.

Focusing on key areas                                                                      

The oil and gas exploration major is believed to be constantly focused on increasing the highly-valuable key liquids production considering a huge gap in the global liquids demand and supply over a longer term while developing on its high margin barrels growth to deliver year-over-year growth and profitability.

A majority of the key investment analysts are quite disappointed about the growth prospects of Chevron Corporation, given a weaker global commodity demand and pricing environment along with Chevron’s continued commitment towards delivering attractive shareholder returns which is believed to continue to hurt the margins of the explorer.


Overall, the investors are advised to “Sell” Chevron Corporation stock looking at the excessively high company valuation with trailing P/E and forward P/E ratios of 20.62 and 23.33 respectively compared to solid industry’s average P/E of 13.72. The PEG ratio of -3.94 depicts no growth but decline compared to robust industry’s growth average of 0.83. Chevron is also debt-burdened with significant total debt of $31.91 billion against weaker total cash position of $12.52 billion only, restricting the company to continue with its operations profitably. The profit margin of 6.34% also seems very nominal.
Published on May 10, 2016
By Yaggyaseni Mittra

Copyrighted 2020. Content published with author's permission.

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