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Chevron Corp CVX

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1-Star Price

PREMIUM

5-Star Price

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Economic Moat

PREMIUM

Stewardship

PREMIUM

Chevron Reports Q2 Loss; Remains Most Financially Sound Integrated Oil

Allen Good, CFA Sector Strategist

Analyst Note

| Allen Good, CFA |

Chevron reported a second-quarter loss of $8.3 billion compared with earnings of $4.3 billion the year before. Included in the second-quarter loss were impairment charges of $1.8 billion from downward revisions to the company’s commodity price outlook and $2.6 billion from the full impairment of its investment in Venezuela due to uncertainty on the outlook of those assets. Excluding the impairments and other special charges, adjusted earnings were a loss of $3.0 billion for the quarter compared with adjusted earnings of $3.4 billion the year before. We plan to incorporate the latest financial results into our model as well as the recently announced Noble acquisition but do not expect a material change to our fair value estimate or narrow moat rating. Unlike its European peers, Chevron did not disclose its internal price deck used to determine the impairments. However, for our valuation purposes it's irrelevant, as we continue to use $60/barrel as our long-term midcycle price assumption.

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Company Profile

Business Description

Chevron is an integrated energy company with exploration, production, and refining operations worldwide. Chevron is the second- largest oil company in the United States with production of 3.2 million of barrels of oil equivalent a day, including 7.6 million cubic feet a day of natural gas and 2.0 million of barrels of liquids a day. Production activities take place in North America, South America, Europe, Africa, Asia, and Australia. Its refineries are in the United States, South Africa, and Asia for total refining capacity of 1.7 million barrels of oil a day. Proven reserves at year-end 2019 stood at 11.4 billion barrels of oil equivalent, including 6.5 billion barrels of liquids and 29.5 trillion cubic feet of natural gas.

Contact
6001 Bollinger Canyon Road
San Ramon, CA, 94583-2324
T +1 925 842-1000
Sector Energy
Industry Oil & Gas Integrated
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 48,200

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