Exxon And Chevron, Top Two Supermajors To Buy

With the increased focus on shale reserves along with a stricter environmental regulatory regime, we foresee significant changes in the energy mix as well as the cost of reserve exploitation. Bidness Etc takes a look at investment opportunities in the ‘Big Four’ oil companies – ExxonMobil Corp (XOM), Chevron Corporation (CVX), Royal Dutch Shell plc (RDS.A) and BP plc (BP) – or the supermajors as they are also known. The US oil majors have fared better against European oil majors, as shown by their better three-year stock performance in our article “Integrated Oil and Gas – How the Oil Flows”. The energy landscape is expected to change after 2020 due to the expected rise in environmental regulation. However, both Chevron and ExxonMobil have operations, proven oil reserves, revenue growth potential and other financial metrics that are strong enough to withstand the impact of stricter environmental regulations.
Read More : CVX - RDS.A

It’s All Upstream For Chevron

Chevron Corporation (CVX) is the second-largest integrated oil company in the US, after ExxonMobil Corp (XOM).  It is included in the ‘Big Oil’ category, which comprises the six largest publicly-owned oil and gas companies, namely: Exxon, Royal Dutch Shell plc (RDS.A), BP plc (BP), Total S.A. (TOT) and ConocoPhillips Co. (COP).

Chevron is involved in the exploration of oil and gas reserves, their extraction, the production and refinement of crude oil, and the marketing of petroleum products to end-users. Exploration and production (E&P) forms its upstream segment, while refining and marketing activities (R&M) are part of its downstream segment.

Read More : XOM - BP - CVX

Increasing Short Interest Ratios For Exxon Mobil And Chevron

Chevron Corporation (CVX) and Exxon Mobil Corp. (XOM) are the two biggest names in the Oil, Gas & Consumable Fuels industry. Their short ratios are currently higher than that of their competitors, and they are the 9th and 11th most heavily shorted stocks in the Dow Jones Industrial respectively.

When a short position in a particular stock is assumed, it implies borrowing a share and anticipating that its price will decrease. Short interest ratio is used to identify the number of days it takes to cover that short position and is calculated by dividing the short interest with the average daily trading volume.

When stock prices go up, investors with short positions in that stock need to cover their positions by purchasing the amount of stocks they shorted. This creates a demand for those stocks leading to a further increase in their prices. This phenomenon is labeled as short squeeze and it is an opportunity for speculators as they can cash in on the rising stock price.

Chevron Corporation (CVX) and Exxon Mobil Corp. (XOM) are the two biggest names in the Oil, Gas & Consumable Fuels industry. Their short ratios are currently higher than that of their competitors, and they are the 9th and 11th most heavily shorted stocks in the Dow Jones Industrial respectively.

When a short position in a particular stock is assumed, it implies borrowing a share and anticipating that its price will decrease. Short interest ratio is used to identify the number of days it takes to cover that short position and is calculated by dividing the short interest with the average daily trading volume.

When stock prices go up, investors with short positions in that stock need to cover their positions by purchasing the amount of stocks they shorted. This creates a demand for those stocks leading to a further increase in their prices. This phenomenon is labeled as short squeeze and it is an opportunity for speculators as they can cash in on the rising stock price.

Read More : XOM - CVX

Earnings Drop But Dividend Investors Should Fill Up On Chevron

Overall earnings for Chevron decreased because of higher operating expenses. The company’s interim update for the quarter on October 9 reflected a grim outlook, due to which EPS expectations were gradually revised from $3.09 to $2.7.

Upstream earnings in the US fell $96 million because of higher exploration, operating and depreciation expenses, despite the increase in revenues. Higher production volumes and price realizations for both liquids and gas were the primary drivers for revenue growth.

Upstream earnings outside the US were up $49 million. The increase was minimal because the positive impact of higher production volumes, higher crude oil price realization and lower foreign currency exchange losses was lessened by higher operating expenses. Also, Chevron earned $600 million in 2012 when it sold a portion of its equity interest in the Wheatstone project in Australia, so it was difficult for the company to trump its non-US upstream earnings from last year.
Read More : CVX - RDS.A - XOM

Chevron – Slick Stock to Buy

Chevron Corporation (CVX), one of the Big Oil companies, has been showing stellar performance lately. Brent crude prices have soared 41% since July 2010 and Chevron stock has gone up by an impressive 67%. Its operating margins were around 13% last quarter, three percentage points ahead of its closest competitor, Exxon Mobil Corporation (XOM). Moreover, the company earned $23 per barrel on average this year, with the closest integrated oil competitor earning at least $5 per barrel less.

Chevron’s return on capital employed is 14.4%, one of the highest among integrated oil companies. The company has returned 5% consistently for the past seven quarters to its shareholders, and taking the company’s low debt-to-equity ratio of 14% into account, it can continue to pay such returns.

In its recent quarter (3QFY13), the California-based company missed expectations for both revenues and earnings. Rising upstream cost and weak refining margins (faced by most refiners) was the reason for the disappointing result. The market currently has an excess supply of gasoline which has led to a fall in prices, while crude oil prices continue to lie north of $100 per barrel. On the upside, Chevron has increased upstream production 3% year-over-over (YoY). With refining margins expected to remain depressed for at least another quarter, Chevron can depend on its upstream business to post earnings growth.

Read More : CVX - RDS.A

Chevron Lowers Capital Expenditure for 2014, Shifts Focus to Shale Gas

Chevron Corporation (CVX) announced yesterday, a $39.8 billion capex budget for 2014, which is almost $2 billion lower than the total expected investment for 2013.

Capex for 2014 is expected to decline because two of the company’s most capital-intensive LNG projects in Western Australia have already seen a peak in their construction activity this year, lowering financing requirements for 2014. The Gorgon LNG project is at 75% completion while the Wheatstone project is 25% complete. Gorgon is expected to start production by mid-2015 while initial production at Wheatstone is expected by 2016.

Read More : CVX

Chevron’s Projects Lower 4Q Earnings as Production Slumps

In an interim update released yesterday, Chevron Corporation (CVX) expects earnings for the fourth quarter (4Q) of fiscal year 2013 (FY13) to be comparable with 3QFY13 results but lower than the year-ago quarter. The California-based company reported upstream earnings of $5.09 billion and downstream earnings of $380 million in 3QFY13.

For the first two months of 4QFY13, the company has reported a 0.8% drop in upstream production from its US and international segments compared to the first two months of 3QFY13. Chevron’s upstream production in the US was 650,000 barrels of oil and natural gas a day, 3.6% lower year-over-year (YoY). The company has cited higher downtime in the Gulf of Mexico due to extreme weather conditions as the reason for this decline in domestic oil and natural gas production.

Read More : CVX - XOM