CVX - Embedded Expectations Analysis - 2018 12 11
Chevron Corporation (CVX:USA) currently trades at a discount to UAFRS-based (Uniform) Assets, with a 0.9x Uniform P/B. However, even at these levels, markets are pricing in expectations for a rebound in profitability, while management has concerns about operating expenses, the development of new marine products, and their oil refinery portfolioSpecifically, management may lack confidence in their ability to maintain lower operating expenses, and to sustain strong Permian growth. Additionally, they may be overstating the conversion of non-operated rigs to net rigs, and may be concerned about their ability to continue high-grading their oil refinery portfolio. Moreover, they may be concerned about the impact of refinery turnarounds in their quarterly results, and may lack confidence in the potential for crude prices to move higher if some intermediates go to make distillates. Lastly, they may lack confidence in their ability to test and develop new products for marine lubricants and additives
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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