Market Leader informed
Chevron Corporation (NYSE:CVX) is the second biggest integrated energy company in the US after ExxonMobil and one of the largest corporations worldwide. Its headquarters are based in San Ramon, California (US).
Chevron Corporation includes a complete production cycle in the oil and gas industry, including exploration and extraction, production, marketing, carriage, chemical production, generation of geothermal energy and power.The company invests in renewable sources of energy and advanced technologies.
Origins of the company
A company called Pacific Coast Oil Co. was established in 1879 after discovery of an oil field in Pico Canyon north of Los Angeles, CA. Later its name was changed to Standard Oil Co. of California and, in 1984 – to Chevron following acquisition of Gulf Oil Corp. At that time this merger was the largest in US history. Another important branch of Chevron’s family tree is Texas Fuel registered in Beaumont, TX, in 1901. These two companies merged in 2001.
The corporation’s market figures and production
The corporation’s market cap is $157.75 bn. There are 2,010.59 millions of issued stocks of the company that maintains a dividend policy.
In 2009 Chevron produced 2.7 mln. barrels of oil per day, or 7% more than in 2008. About 73% of this volume was extracted outside the US. The marketing network supports retail trade on six continents. In 2009 Chevron invested in 13 energy facilities in the US and Asia.
About 65,000 people were employed by the company at start of 2010.
John S. Watson has been the Chairman and the CEO of the company since 2010.
Technologies and new energies
Chevron's operations are focused on technologies that increase its chances during exploration, development and production of oil and natural gas. In addition, it makes investments in the development of new energy technologies: search for efficient biofuel production methods, solar technologies and expansion of renewable sources of energy.
Safety
Chevron strives to create favorable workplace conditions for its employees and provides support to environmental protection measures. The management’s persistent effort leveled at improved occupational safety continuously brings fruit. In 2009 Chevron was among the best industry players in terms of reducing injury incidence rates.
Operating principles of safety
Environmental disasters related to oil extraction and production serve as a bad lesson for bad-faith companies.Chevron holds safety principles and production culture among the top priorities.
Chevron strives to increase safety and protect people’s health and the environment during its operations, ensure extraction reliability and efficiency on a par with global standards according to Operational Excellence (OE).
Operational Excellence pursues five goals:
- lowering injury incidence rates;
- contributing to employee recovery and reducing significant risks for health;
- eliminating spills and environmental events and reducing environmental risks;
- incident-free operations;
- using resources and assets as efficiently as possible.
Operational Excellence requires constant focus on endless production details and the human factor. Chevron’s production culture is based on 10 exploitation principles, the so-called Business Code used by employees, contractors, executives and managers.
These principles rest on two premises:
- do it safely or don’t do it at all;
- have time to do it right.
Here’s the 10 principles:
- always act reasonably;
- always work in safe and controlled conditions;
- always check safety devices and their functionality;
- always follow safe operating methods;
- always exceed client expectations;
- always support integrity of specialized systems;
- always comply with all applicable rules and standards;
- always restrain non-normal conditions;
- always comply with written guidelines for high-risk or unusual situations;
- always engage right people in making decisions that affect processes and equipment.
Corporate business
A modern company cannot develop for a long time unless its business cycle is focused on one production stage or it uses a limited number of technologies during operation.Chevron’s main operations are supplemented by a few companies that add such variety.
Chevron owns and operates three coalmines and mineral mines in the US through its subsidiary, Chevron Mining Inc. which wholly owns coal and molybdenum production licenses. CМ Inc. headquarters are located in Englewood, CO.
Chevron’s Global Power Company has 25+ years of successful experience in creating and operating commercial energy projects in the US and Asia. The company’s energy assets have a total capacity of more than 3,100 megawatt.
Chevron is involved in operation of 13 power generation facilities in the US and Asia. Twelve of them have a combined cycle and use natural gas to convert heat into additional power for industrial purposes.
The thirteenth facility is wind-driven and situated in Casper, WY. It was built on the site of an oil refinery and started operations in late 2009.
Chevron is also a global leader in geothermal energy generation with major operations concentrated in Indonesia and the Philippines.
Chevron has two geothermal projects in Indonesia - Salak and Darajat fields in West Java – which generate 636 megawatt of geothermal energy.
Two facilities are operated in the Philippines - Tiwi and Mak-Bans. They provide geothermal energy to the islands of Luzon. These facilities generate a combined 637 megawatt of power.
Chevron operates a petrochemical production through a joint venture, Chevron Phillips Chemical Company LLC (CPChem). CPChem’s headquarters are in Woodlands, TX. CPChem has about 4,600 employees at 35 production facilities in the US, Brazil, Columbia, Singapore, China, South Korea, Saudi Arabia, Qatar and Belgium.
CPChem is a leading supplier of products used in different industries and households, including:
- olefins and polyolefines used in food packaging, high pressure pipes and fuel tanks;
- aromatic compounds used for a variety of items – from aspirin to safety air bags and CD boxes;
- alpha-olefins used for production of synthetic engine oils, lubricants and car additives;
- styrene used in packaging, electronic components, paper, dishes, tires, carpeting and toys.
Chevron develops, produces and globally sells additives – a reinforcement for lubricating oils and fuel – through its subsidiary, Chevron Oronite.
Chevron is also involved in cash management and debt financing, corporate administrative functions, insurance and real estate operations.
Research
Today’s realities – global warming, hazard of man-caused disasters – drive scientists and major corporations to carry out research and change previous operating conditions and principles.Monitoring changes in the global energy sector, Chevron is trying to find new and more effective ways to meet increasing international demand for clean, affordable and reliable energy.
Chevron develops new technologies and innovative ways of energy generation. Three companies are operating for the corporation in this sphere.
Chevron Technology Ventures (CTV) studies, designs and sells new technologies for production modernization and more efficient use of energy. CTV’s investment portfolio includes research concerning:
- biofuel;
- hydrogen fuel;
- new energy types;
- venture capital.
Technology Marketing (TEMA) offers technologies and services for joint processing facilities – Chevron Lummus Global LLC and Advanced Refining Technologies LP. TEMA also commercializes new technologies and provides international technical support.
Global Downstream Technology seeks ideas for innovative solutions in processing and improvement of industrial production.
The company's 2010 statements
Oil appreciation in Q2 2010 boosted Chevron’s revenues by a third – to 53 bn. dollars as compared to Q2 2009.
During his press conference Mr. Watson stated: “We had another successful quarter. Growth of income was backed by more expensive oil and natural gas and increased production volumes. Profitability of the processing business has grown”.
Discussing Chevron’s involvement in new projects and development of new fields Mr. Watson said that they had most visible progress in Australia. New deep-sea natural gas fields were discovered during geological survey operations within Gorgon and Wheatstone projects. An agreement for sale of 1.95 mln. tons of liquefied natural gas from the Wheatstone field was signed with Korean Gas Corporation.
There is also progress in oil production. This concerns a project for enhancement of oil production in Indonesia by 20,000 barrels a day. The corporation intends to produce oil in conjunction with Rosneft in the eastern part of the Black Sea in a deep-sea field. Finally, it purchased 200,000 and 675,000 acres of land in Canada and Rumania to produce shale gas.
In Q2 2010 the American oil and natural gas production division generated $1.1 bn net income with only $ 0.3 bn in the same period in 2009 due to a rise in oil and natural gas prices. A significant share of the oil production growth results from commissioning of a new drilling platform, Tahiti Field.
Non-US profits increased two and a half times to $3.5 bn. These results were also made possible by oil and natural gas prices and an auspicious change in currency exchange rates. Oil and natural gas production volumes of the international division in the crude oil equivalent grew to 2.04 mln. barrels a day. Oil production added 4%.
Kazakhstan, Angola and Brazil became major sources of increase. Natural gas also demonstrated impressive results with a 3% rise in production volumes. Kazakhstan, Thailand and South America were growth drivers. Their volumes came as a partial compensation for negative results in Indonesia, the Philippines, Europe and Bangladesh.
Besides the extractive sector, profits were also generated by oil processing companies.
US-based facilities fixed a profit of $0.4 bn after they were in the red in Q2 2009. However, demand for their products went down (-34,000 barrels a day). In particular, this division’s sales amounted to 1.41 mln. barrels a day. Major contributors included gas with sales plummeting by 5% and aviation fuel.
Downstream international subdivision finished the quarter with a profit of $0.5 bn. while its last year’s Q2 net income was only $0.2 bn. Income generated by derivative instruments contributed to better results. Sales of Downstream international subdivision reduced by 3% to 1.78 mln. barrels a day.
Annual financial figures
Accounting standard: US GAAP, mln. US dollars
Investments in the corporation
A growing number of stocks in major institutional investors’ portfolios points to an interest in Chevron.
REUTERS analysts also recommend buying this corporation's stocks. So, 5 analysts recommend ‘buy’, 8 – ‘above the market’, 6 – ‘hold’. There are no ‘below the market’ or ‘sell’.
Technical analysis of the stock
The corporation’s stocks are traded on NYSE and included in the listings of Dow Jones, S&P500. Options are traded with a narrow spread. The stock’s long-term charts correlate to similar charts of the oil futures.
Now the stock price is in a long-term range. New levels will be opened for the price after it breaks through the boundary of the sloping channel and exits the long-term range:
$ 94.2 – 138 %;
$100.7 – 161 %.
According to the team of analysts of the US and Canada Land Association of Traders, the company’s stocks look good in the context of the multidirectional movement of the market. Dividend yield, diversified production and the company's position among the energy sector’s leaders additionally encourage buying.
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