CVX - Embedded Expectations Analysis - 2018 09 18
Chevron Corporation (CVX:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Assets, with a 1.0x Uniform P/B. At these levels, markets are pricing in expectations for a rebound in profitability, but management has concerns about investments, Gulf Coast liquid exports, and growth in the PermianSpecifically, management may lack confidence in their ability to sustain high dividend payments, cash generation momentum, and improvement in their rigs in Argentina. Additionally, they may lack confidence in their ability to sustain growth in the Permian, particularly within their investments in NGL processing, and production from their Wheatstone Train 2 plant. Furthermore, they may be concerned about their Permian production being exposed to the Midland basis differential, and may lack confidence in their ability to sustain high liquid exports from the Gulf Coast. They may also be concerned about higher-than-expected engineering costs for Tengiz, and may be exaggerating their satisfaction related to performance in the Marcelus and Utica segments. Finally, they may lack confidence in their Big Foot platform, specifically the integrity of the asset
Chevron is engaged in energy and chemicals operations. Upstream operations consist primarily of, among others, exploring for, developing and producing crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas, storage and marketing of natural gas; and a gas-to-liquids plant. Downstream operations consist primarily of, among others, refining crude oil into petroleum products; marketing of crude oil and refined products; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses and fuel and lubricant additives.
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