118.51 -0.12 (-0.10%)
After hours: 5:49PM EST
|Bid||118.69 x 800|
|Ask||118.62 x 1000|
|Day's range||118.60 - 119.70|
|52-week range||100.22 - 127.34|
|Beta (3Y monthly)||0.99|
|PE ratio (TTM)||17.02|
|Earnings date||30 Jan 2020 - 3 Feb 2020|
|Forward dividend & yield||4.76 (4.01%)|
|1y target est||136.58|
Chevron has been among the strongest performers among the big oil majors but the company is trying to stay ahead of weakness in shale that has hurt other large oil exploration companies. "The company is proactively evaluating existing operating models and structures to better position Chevron to compete and win in any environment," said Chevron spokesman Kent Robertson. Known for cost cutting at refining and chemical operations earlier in his career, Wirth's overhaul will apply those skills to Chevron's upstream operations, which supply 90% of profit but face challenges from shale fields that require constant investment to keep production rising.
The federal government's EIA report revealed that crude inventories rose by 1.4 million barrels, compared to the 1.6 million barrels increase that energy analysts had expected.
Investing.com – Volatility was back forcefully in oil Wednesday with the market jumping nearly 3% to recoup almost all it lost in the previous session.
(Bloomberg) -- California intensified its battle against fossil fuels by seeking independent reviews of all pending hydraulic fracturing permits and halting approvals of a key production technique in an area that has pumped crude for more than a century.Governor Gavin Newsom ordered regulators to assess the safety of high-pressure steamflooding, a production process that has been linked to recent oil leaks in Kern County, the state’s Department of Conservation said in a statement Tuesday. The state is also requesting third-party scientific reviews of any pending applications for fracking, as well as looking for ways to toughen regulations to protect residents near oil and natural gas well sites.It’s the latest in a series of actions or threats against unconventional oil and gas production. Democratic presidential contenders Elizabeth Warren and Bernie Sanders have promised to ban fracking if elected. The U.K. government halted new fracking wells in England earlier this month on concerns about earthquakes.Newsom, a San Francisco Democrat in his first term as governor, has been stepping up pressure on oil and natural gas producers through a series of initiatives such as denying permits and drilling leases on land that is or once was protected by federal authorities.California Resources Corp., the state’s largest oil producer, tumbled as much as 32% on the news and its bonds dropped to just 25 cents on the dollar, the lowest since 2016. The company predicted no “significant effect” on its output because the type of steamflooding it employs is exempt from the ban, according to an email.Berry Petroleum Corp., a driller based in California’s de facto oil capital, Bakersfield, slumped as much as 25%. The new rules won’t affect Berry’s 2019 financial performance but “potentially impacts” certain wells that will be drilled in the future, the company said in a statement. KeyBanc Capital Markets analysts Leo Mariani and Steven Dechert downgraded their recommendation for the stock to the equivalent of sell, from the equivalent of hold.“This moratorium is not the most effective way to manage the industry,” Berry said. It will benefit “countries that export oil to California such as OPEC countries, which have poor social justice and environmental records, pay no California taxes and don’t employ our citizens.”Phase OutCalifornia is the sixth-biggest oil-producing state in the nation, ahead of former powerhouses like Alaska. Although in-state output has plunged by 60% since the mid-1980s, explorers rely on so-called enhanced recovery techniques like steamflooding to keep fields first drilled in the 1800s in active production.“These are necessary steps to strengthen oversight of oil and gas extraction as we phase out our dependence on fossil fuels and focus on clean energy sources,” Newsom said. “This transition cannot happen overnight; it must advance in a deliberate way to protect people, our environment, and our economy.”The state fined Chevron Corp. $2.7 million last month after several “surface expressions” of water and oil were found at the Cymric field near Bakersfield. The Department of Conservation attributed the leaks to steamflooding and said they created a “significant threat of harm to human health and the environment.”Yorba LindaChevron said it will comply with the new regulations while protecting people and the environment. Western States Petroleum Association said the state’s moves are “disappointing” given that “multiple state agencies already validate our protection of health, safety and the environment during production.”Steamflooding in California was introduced in the Yorba Linda Field in 1960 and then the massive Kern field a year later.Explorers such as California Resources tout it as a low-cost method for creating steady, long-term crude flows from fields that otherwise would contribute little in terms of output or profits. The technique is also used in West Texas, Colombia and the Persian Gulf region.“Governor Newsom’s historic action protects Californians from some of the most dangerous and destructive oil-extraction techniques,” said Kassie Siegel, senior counsel and director of the Center for Biological Diversity’s Climate Law Institute. “This marks the turning of the tide against the oil industry, which has been allowed to drill at will in our state for more than 150 years.”\--With assistance from Joe Carroll.To contact the reporters on this story: Kevin Crowley in Houston at email@example.com;David Wethe in Houston at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, Tina Davis, Carlos CaminadaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- When Securities and Exchange Commission Chairman Jay Clayton handed a policy win to corporate executives this month, he pointed to a surprising source of support: a mailbag full of encouragement from ordinary Americans.To hear Clayton tell it, these folks are really focused on the intricacies of the corporate shareholder-voting process. “Some of the letters that struck me the most,” he said at a commission meeting in Washington, “came from long-term Main Street investors, including an Army veteran and a Marine veteran, a police officer, a retired teacher, a public servant, a single mom, a couple of retirees who saved for retirement.” Each bolstered Clayton’s case for limiting the power of dissenting shareholders.But a close look at the seven letters Clayton highlighted, and about two dozen others submitted to the SEC by supposedly regular people, shows they are the product of a misleading -- and laughably clumsy -- public relations campaign by corporate interests.That retired teacher? Pauline Yee said she never wrote a letter, although the signature was hers. Those military vets? It turns out they’re the brother and cousin of the chairman of 60 Plus Association, a Virginia-based advocacy group paid by corporate supporters of the SEC initiative. That single mom? Data embedded in the electronically submitted letter says someone at 60 Plus wrote it. That retired couple? Their son-in-law runs 60 Plus.“I never wrote a letter,” said one of the retirees, Vytautas Alksninis, reached by phone at his home in Connecticut. “What’s this all about?”Then there’s the public servant Clayton mentioned. Marie Reed’s letter has sharp words for proxy advisers, firms that counsel fund companies on how to vote at shareholder meetings. But when reached by phone in California, the retired state worker said she wasn’t familiar with the term. She said the letter originated with a public-affairs firm that contacted her out of the blue.“They wrote it, and I allowed them to use my name after I read it,” she said. “I didn’t go digging into all of this.”The SEC declined to comment on any irregularities with the letters. In a Tuesday interview, Clayton sidestepped a question about how the agency ensures comment letters are genuine. He did emphasize that the regulator’s potential revamp of shareholder voting rules are proposals, adding that there will be ample time for people on both sides to weigh in before any changes are finalized.“We welcome input in all ways,” Clayton said in the interview with Bloomberg Television’s David Westin. “On this issue, where there are a lot of different views and a lot of different interests, we encourage people to come in and talk to us, send us their comments.”Unusual ErrorEven a casual reading of the letters shows something amiss. Four of the seven bear the same unusual error -- an out-of-context phrase inserted into the SEC’s mailing address. The same mistake turns up in at least 20 other letters submitted by supposedly ordinary Americans in support of the change. It’s an inadvertent digital fingerprint revealing the scope of the campaign.At issue is the proxy process, the rules for how corporations conduct shareholder votes, such as when directors stand for re-election at annual meetings. Most of the time, management wins in a landslide. But shareholders occasionally revolt over excessive pay or mismanagement, or a small investor forces a vote on an issue that management doesn’t endorse.In recent years, more small shareholders have been proposing resolutions about social or environmental issues such as climate change. And investment managers that control large numbers of votes, such as BlackRock Inc., have begun prioritizing these topics as well, arguing that they’re relevant to the long-term sustainability of business models. That’s an unwelcome change for some corporate boards, especially in the fossil-fuel industry.Last year, the National Association of Manufacturers helped form the Main Street Investors Coalition to oppose what it calls the “politicization” of the investment process and to argue that fund managers and boards should focus on maximizing profits. One of its priorities is changing shareholder voting rules.Although the coalition has other members, NAM provided most of its initial funding, according to a person with knowledge of the arrangement who spoke on condition of anonymity. The manufacturers’ association represents corporate giants such as Exxon Mobil Corp. and Chevron Corp.NAM said in a statement that it didn’t fund 60 Plus or direct any advocacy efforts on the SEC issue. Chevron wouldn’t comment on the coalition but acknowledged in a statement that it sometimes works with trade associations to “help inform their understanding of issues.” Exxon Mobil said it had no immediate comment.Public CommentsLast year, Clayton signaled he was considering changes to the rules and issued a call for public comments. Letters poured in. Most were from investment firms, corporations, trade groups and other interested parties that openly identified themselves. Many fund managers wrote to say some of the changes under consideration would be counterproductive.The National Association of Manufacturers, Exxon Mobil and Chevron all called for new limits on shareholders’ proposals. So did two ordinary citizens who identified themselves as members of Main Street Investors. Other letters were ostensibly written by regular folks.But more than two dozen of them appear to have ties to 60 Plus, a member of the Main Street Investors Coalition. While the nonprofit group calls itself an advocate for senior citizens’ issues, it routinely takes money from corporations and advocates for their causes on issues as varied as sugar subsidies and Alabama utility commissioners.The group didn’t cast a wide net in recruiting letter-writers. Names included those of a woman who used to work at 60 Plus’s accounting firm; a former secretary at 60 Plus; and various friends and relatives of Saul Anuzis, the 60 Plus president. None mentioned a connection to the organization.One letter bore the name of Chad Connelly. In an email, Connelly acknowledged being friends with Anuzis but disavowed the letter. “Someone apparently used my name,” he wrote. “That’s not a letter I’ve ever even seen.”Even Scott Hogenson, a contractor for 60 Plus who has appeared in the press as its spokesman, submitted a comment. The letter gives his name as S. Alan Hogenson and doesn’t mention his relationship to the group. In an interview, Hogenson said he wrote the letter and stands by it.Anuzis, the 60 Plus president, acknowledged that his group recruited submitters, provided drafts and, in two cases, sent letters on members’ behalf. He also acknowledged getting money from members of the coalition. “We don’t get paid for specific projects,” he said in an interview. “We get contributions from members who are part of the coalition. We’re not getting paid for a specific letter.”Anuzis said the project aligns with 60 Plus’s policy goals and that no names were used without permission. Those who said they hadn’t agreed, such as his in-laws, were mistaken. “They are 80-some-years old,” he said. “This happened months ago. I’m sure it’s not top of their minds.”Clandestine AidTwo letters point to another source of clandestine aid for the coalition. Reed, the retired state worker from California whose letter was cited by Clayton, said the man who provided her with a letter worked at FSB Core Strategies, a California public-affairs shop, and said he was working on behalf of a group called Protect Our Pensions. Another SEC letter containing similar phrases, also cited by Clayton, came from a California sheriff who said in a 2017 interview that he was introduced to Protect Our Pensions by the same FSB staffer. An FSB executive didn’t respond to requests for comment.Protect Our Pensions, whose talking points align with those of the fossil-fuel industry, was the subject of a 2017 Bloomberg Businessweek article showing it was put together by corporate public-affairs employees and that some of its alleged members, including the retired firefighter identified as its founder, said they had nothing to do with it or couldn’t remember agreeing to join.Opponents of changes to the voting system stuffed the SEC’s mailbox too. The agency reported getting more than 18,000 identical form letters supporting the current rules. Those letters were obvious duplicates and are grouped together on the SEC’s comments page. Clayton’s speech didn’t mention them.In his Nov. 5 remarks, Clayton unveiled proposals along the lines of those pushed by Main Street Investors Coalition and its corporate backers that would shift power from investors to corporate boards. In addition to Clayton, who was appointed by President Donald Trump, the changes are backed by two Republicans on the five-member commission. For the changes to take effect, the SEC will have to vote again to finalize the rules after a 60-day public comment period.The SEC’s proposal would increase the amount of stock newer shareholders must own to get a proposal on the ballot, aligning with corporate claims that many resolutions are wastes of time and money. Under current rules, investors must have owned at least $2,000 of stock for a year before they can submit resolutions. The SEC’s proposal would raise that dollar threshold to $25,000 for shareholders of less than two years and $15,000 for shareholders of less than three years, while leaving the $2,000 threshold in place for longer-term holders.The proposal also would impose new restrictions on proxy-advisory firms, whose recommendations are often decisive on shareholder votes. Corporations complain that their advice is sometimes poorly reasoned or inscrutable. Clayton would require the firms to show their recommendations to companies before issuing them.Fund managers warn the measure may have a chilling effect on proxy advisers, because a corporation could threaten a lawsuit if a draft recommendation isn’t revised.Anuzis said he was glad to hear that Clayton had cited letters generated by his organization. “I’m extremely proud that we were very effective,” he said. “If four of our letters were quoted, that means we did a great job.”(Adds comment from Jay Clayton in the eighth and ninth paragraphs.)\--With assistance from Ben Bain.To contact the reporters on this story: Zachary R. Mider in New York at firstname.lastname@example.org;Benjamin Elgin in San Francisco at email@example.comTo contact the editors responsible for this story: Robert Friedman at firstname.lastname@example.org, John VoskuhlFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The federal government's EIA report revealed that domestic crude production climbed to yet another record high of 12.8 million barrels per day.
Philippine oil and shipping group Udenna Corp said on Wednesday it has signed a deal to acquire the 45% interest of a Chevron unit in the country's Malampaya gas-to-power project, subject to regulatory approvals. Udenna, which controls fuel retailer Phoenix Petroleum Philippines Inc and shipping and logistics firm Chelsea Logistics and Infrastructure Holdings Corp, said it has signed a sale and purchase agreement with Chevron Malampaya LLC. Phoenix, together with Chinese partner CNOOC Gas and Power and state-owned Philippine National Oil Company (PNOC), is looking to build a $2 billion liquefied natural gas hub in the Philippines.
(Bloomberg) -- Offshore oil production is expected to hit a peak in 2020 before joining the shale industry in a slowdown that could dramatically rewrite market supply predictions.A report by analysts at Sanford C. Bernstein & Co. sees projects in the Gulf of Mexico and off of South America significantly boosting output next year. After that, though, the odds drop for any further growth gains, the report found. Meanwhile, two well-known shale pioneers last month forecast a downturn ahead for their sector.Together, the warnings could signal a new era for a commodity that’s selling for about half the price reached just five years ago. The catalyst is a shareholder push for spending discipline. The result: Potentially a “tempting scenario” for investors where oil prices rise even as costs and demand fall, said Bob Brackett, a Bernstein report author.Three crude sources have seen substantive growth this century -- deepwater, shale and oil sands, according to Brackett. “The first peaks in 2020,” he wrote in an email. “The second peaks a few years later (and is slowing). And the future of oil sands is in question from a sustainability/CO2 impact.”The offshore industry has struggled to maintain growth since oil prices plunged to less than $30 a barrel in 2016 after reaching more than $100 in mid-2014.The high prices spurred a flurry of expensive projects between 2010 and 2014. But today those projects are “barely able” to generate value, according to industry consultant Rystad Energy, which evaluated offshore oil fields sanctioned since 2010 in an Oct. 30 report and ranked them by estimated value per barrel of oil.While newer deepwater projects are less expensive, they still take longer to develop than shale wells and they can’t compete on costs. Over the last few years, roughly $100 billion in spending has shifted to shale work as a result, according IHS Markit.Royal Dutch Shell Plc’s decision last month to pull the plug on a pair of projects in Kazakhstan because of their high costs points to offshore’s changing status. The latest example hit last week when Brazil failed to draw bids from the world’s oil majors in its auction of deep-sea deposits that could hold 15 billion barrels of oil, almost twice as much as Norway’s reserves.“The pipeline of things that have been discovered just won’t get sanctioned,” Brackett said.Shale industry pioneers Scott Sheffield, Pioneer Natural Resources Co.’s chief executive officer, and Mark Papa, who built Enron Corp. castoff EOG Resources Inc. into one of the world’s biggest independent oil explorers, are sounding the alarm on shale growth.Across the shale industry, output growth will slow next year, Sheffield said on Nov. 5. That will provide a boost for prices through the early 2020s, he said.“U.S. shale production on a year-over-year growth basis will be considerably less powerful in 2021 and later years than most people currently expect,” Papa said during an earnings call for Centennial Resource Development Inc., his current company.To be sure, both the shale and offshore sectors will continue to produce. Sheffield sees about 700,000 barrels a day being added next year in U.S. shale fields while the Energy Information Administration predicts daily production will expand by 910,000 barrels. Even that, though, would be half of last year’s increase.In early 2020, Exxon Mobil Corp. is expected to begin producing oil from deepwater wells off the coast of Guyana that have the potential to produce more than 6 billion barrels. Meanwhile, eight new projects are opening in the Gulf of Mexico this year and in 2020, according to an Oct. 16 report by the U.S. Energy Information Administration.Even so, the Gulf’s share of U.S. production overall is expected to shrink, the EIA report said, to about 15% from 23% in 2011. In 2014, the industry had 245 floating rigs working globally, according to Evercore ISI. Now there are less than half that number, and contractors are trying to manage through the downturn. Valaris Plc, one of the biggest owners of offshore rigs, announced Tuesday a new round of cost cuts adding up to at least $100 million as executives “fully recognize the continued pressures in the current market environment,” according to a statement.Some workers in the industry see few silver linings ahead.“The fracking technology has just opened up so much more oil,” said Chip Keener, a former manager of the global rig fleet for Transocean Ltd., the biggest owner of deepwater rigs. “Deepwater I think is going to be on the skids for a very long time.”(Updates with comment from Valaris in 15th paragraph.)To contact the reporters on this story: David Wethe in Houston at email@example.com;Allison Mccartney in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, Joe Carroll, Carlos CaminadaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Credit Suisse Group AG’s investment bank chief stepped down, adding to months of turmoil at the top that started with the departure of its wealth management head and culminated in a spying scandal.Jim Amine decided to resign as chief executive officer of the investment banking and capital markets division and leave the executive board, taking the role as head of private credit opportunities based in New York. The bank appointed David Miller, a 22-year Credit Suisse veteran, to succeed Amine and join the executive board.The move is the third change at the top of the Swiss bank in less than five months, coming just weeks after the departure of Pierre-Olivier Bouee in the wake of a spying scandal and the abrupt exit of Iqbal Khan as head of the wealth-management unit in July. Amine’s division, which covers investment banking out of New York and London, reported its second quarterly loss of the year in the third quarter. Revenue for the nine months through September fell 27% from a year earlier to 1.24 billion francs.Slumping revenue at the investment banking and capital markets unit has become a growing issue for Chief Executive Officer Tidjane Thiam in recent quarters, while global markets trading -- a long-term straggler -- has made surprise profit gains. Following the bank’s earnings in late October, KBW analyst Thomas Hallett said that questions remain on the underperforming capital markets unit.The bank lost out this year as a string of deals collapsed or didn’t get off the ground, including the planned initial public offering of Swiss Re AG’s U.K.-based Reassure unit and Chevron Corp.’s abandoned bid for Anadarko Petroleum Corp. Still, the bank has managed to retain it’s global top 10 spot for mergers and acquisitions and it’s a global coordinator on Saudi Aramco’s mammoth share sale.Executive ReshuffleAmine steps down from the executive board after leading investment banking and capital markets for more than a decade. Eric Varvel, who is based in New York and heads Credit Suisse’s asset management business, was appointed chairman of the investment and capital markets unit and Harold Bogle will be the division’s vice chairman. Amine will report to Varvel in his new role, the bank said.Miller was most recently global head of credit and part of the leadership team at global markets, the bank’s main trading unit. Previously he was global head of leveraged finance capital markets and U.S. co-chief of the syndicated loan group.“I want to thank Jim Amine for his invaluable contributions in building our leading investment banking footprint over many years,” Thiam said in a statement. “His insight and knowledge across all aspects of investment banking have been, and will continue to be, of huge benefit to the firm.”Bouee, Thiam’s chief lieutenant at three companies for more than 10 years, stepped down as Credit Suisse’s COO last month after ordering detectives to shadow former wealth-management head Khan in a spying scandal that gripped Zurich financial circles. The bank’s internal investigation concluded that the CEO had no knowledge of the spying.(Adds analyst comment on results in fourth paragraph.)To contact the reporter on this story: Patrick Winters in Zurich at firstname.lastname@example.orgTo contact the editors responsible for this story: Dale Crofts at email@example.com, Ross LarsenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Energy group Centrica and Stadtwerke Muenchen (SWM) Group have launched the sale of Spirit Energy, one of the North Sea's biggest oil and gas producers, according to a document sent to prospective buyers seen by Reuters. Spirit Energy currently produces around 130,000 barrels of oil equivalent per day (boed) which is set to taper off to around 100,000 boed by 2025, although it also comes with 270 million boe in so-called 2P reserves, the document showed. Such yet-to-be-exploited barrels can be attractive to some of the private-equity backed firms that have bought aging North Sea assets from oil majors in recent years, looking for future growth ahead of a potential stock market listing or sale.
Israel's Delek Group said on Sunday its Ithaca subsidiary, which it plans to spin off via a London listing, completed a deal to buy most of Chevron's British North Sea oil and gas fields for $2 billion. Delek said the deal, backdated to Jan. 1, will quadruple Ithaca’s pro-forma production to 80,000 barrels of oil equivalent per day and raise the company's proven reserves by 150% to 225 million barrels. Delek, which is a partner in large natural gas projects off Israel's Mediterranean coast, paid $1.68 billion, with the rest coming from cash flow accumulated coming from the sale of oil and gas at Chevron's North Sea fields after the start of 2019.
Ending the Trade off Between Engine and After Treatment Systems Protection, Chevron Unveils a Revolutionary New Additive Technology and Product Line
Angola expects to announce the winners of its 2019 oil and gas licence auction round in April as part of a multi-year plan to boost declining output, a senior executive at the National Agency of Petroleum, Gas and Biofuels (ANPG) said on Thursday. "By April 2020 we expect to award the contracts for the current licensing rounds in the Benguela and Namibe basins," ANPG board member Belarmino Chitangueleca said. "Next year we do all onshore (blocks) and by December 2020 we will be signing contracts," Chitangueleca told Reuters on the sidelines of an African oil and gas conference in Cape Town.
(Bloomberg Opinion) -- Royal Dutch Shell Plc made a big investment in offshore energy this week — wind energy, that is. The very next day, Brazil announced the results of a more traditional energy auction in the waters off its coast. They were not good.The country’s biggest-ever sale of oil deposits flopped on Wednesday morning. Only two out of four blocks were sold, and only one of those involved foreign bidders, with China’s CNOOC Ltd. and China National Oil and Gas Exploration and Development Co. taking all of 10% of the Buzios field. Petroleo Brasileiro SA took the other 90% and all of the Itapu block. Western oil majors, such as Shell or Exxon Mobil Corp., were nowhere to be seen.Offshore oil investment was all the rage among Big Oil during the supercycle, with capital expenditure almost quadrupling in the decade up to 2014. That is the problem. The majors poured money into large, multi-year projects prone to delays and, because of their often bespoke engineering, spiraling budgets. The result: tumbling return on capital and an inability to dial back investment quickly when the oil crash hit in 2014. Roughly 3,000 new offshore projects sanctioned between 2010 and 2014 have either barely generated any value for oil companies or are expected to generate none at all, according to a recent study published by Rystad Energy, a consultancy:More recent investments score better, mostly because the boom tailed off, with offshore capex falling by more than half between 2014 and 2018. That took the heat out of industry inflation; and, because of the bonfire of returns in the prior decade, oil majors got smarter about such things as standardizing offshore equipment design to cut costs and shorten schedules. The pace of new projects has picked up again after the slump. Exxon, for example, has effectively opened up an entire new offshore zone with its Guyanese fields.Still, one look at the stock prices of oilfield services firms, especially offshore-focused types such as Transocean Ltd. and Noble Corp. Plc, tells you this investment wave is nothing like the tsunami of yesteryear. Bad memories combined with unease about both near- and long-term oil demand make bold bets on big, multi-year offshore projects a tough sell with investors more interested in payouts. Even Exxon’s success in Guyana gets overshadowed by the fact that the company’s capex bill leaves it borrowing to pay its dividend. And Exxon, like Chevron Corp. and other majors, has swung more of its spending toward shorter-cycle onshore fracking in North America.Brazil’s brush-off is an ominous sign the investment discipline demanded by energy investors is choking off one of the world’s biggest sources of oil-supply growth. In its latest World Oil Outlook published this week, OPEC cited Brazil as being second only to the U.S. in terms of medium-term growth, and number one in terms of projected long-term non-OPEC growth. Bob Brackett, an analyst at Sanford C. Bernstein, published a report a couple of weeks ago pondering if global offshore oil supply would peak next year, perhaps for good.The implications are profound. There is a wide range of views on when global oil demand will slow or peak altogether. If it is later than sometime next decade, then the decline in offshore production that will inevitably follow a mass exodus from this part of the business could stoke another upcycle in prices. The Brazil auction suggests, however, that such possibilities play second fiddle to expectations on the part of many investors that oil has entered its twilight years.Such results are ominous for offshore services providers, of course, and for the countries involved. Brazil’s currency slumped Wednesday morning as the market digested the lack of foreign capital targeting the country’s choicest oil resources.Another country that should take note is Saudi Arabia. Like Brazil, it’s trying to tempt foreign buyers to pay up for a piece of its black gold. On the same morning, reports emerged that Saudi Arabian Oil Co. is seeking commitments from Chinese state-owned entities to invest in its IPO. Such strategic buyers do provide cash. But as Brazil could tell Aramco, turning to them also says a lot about the broader appetite for what you’re selling.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Chevron today announced a contribution of $100,000 from the Chevron Global Community Fund to the American Red Cross to support relief efforts for wildfires in California. Chevron, with operations all around California and 140 years of history in the state, is committed to being a strong and reliable partner in the communities where its employees live and work. “So many people in the state have felt a devastating impact from these fires,” said Chevron Chairman and CEO Michael Wirth.
(Bloomberg Opinion) -- Occidental Petroleum Corp.’s swing from aggressive offense to deep defense has taken about six months. In May, it elbowed aside much bigger Chevron Corp. to capture Anadarko Petroleum Corp. On Tuesday, it laid out plans to cope with the aftermath.The messiness of Oxy’s third-quarter results, the first to include Anadarko, was their saving grace. Earnings missed consensus estimates by a mile, but the panoply of moving parts, including merger expenses, makes the number almost meaningless. Far more important is Oxy’s plan for 2020, which can be summed up in one word: austerity.The company took the unusual step of providing details about spending plans for next year, something it normally saves for the fourth-quarter call. There is a simple reason for this: The stock yielded north of 7% for much of the period since the Anadarko deal closed in early August. There is a fine line between a yield that looks unusually attractive and one that just looks unsustainable, and Oxy has been walking it.So while the mantra of favoring free cash flow over growth can be heard pretty much everywhere in the oil business these days, Oxy is shouting it a little louder. Analysts were forecasting capital expenditure of $7.5 billion in 2020, according to figures compiled by Bloomberg. Oxy’s target is at least $2 billion lower than that, a figure that happens to cover three quarters of the annualized dividend payment.Lower capex comes with a catch: guidance for production growth in 2020 is now set at 2% compared with the 5% target mentioned during the Anadarko pursuit. That said, the budget still implies a productivity gain of roughly 16% compared with the consensus forecast, assuming the latter includes capex for Western Midstream Partners LP; Oxy’s budget does not. Such synergies are, of course, the basis of Oxy’s argument for buying Anadarko in the first place, and much of Tuesday’s call was taken up with emphasizing early realizations of those and further benefits to come. As has been the case with many other E&P acquirers in the past year or so, however, Oxy isn’t getting the benefit of the doubt. As of lunchtime Tuesday in New York, the stock was down almost 6%, making it the worst performer of any size in the sector apart from Chesapeake Energy Corp. — which trumped everyone with a going-concern warning.The fact remains that Oxy stretched itself enormously to win Anadarko just as the outlook for oil soured. In doing so, it also took on high-priced financing from Warren Buffett that looks set to swallow 40% of the current value of the deal’s cost savings (see the math here). Payments on Buffett’s preferred stock took almost half of Oxy’s adjusted net income in the third quarter. Having begun the year trumpeting reasonable growth balanced with high payouts, Oxy now offers low growth to protect payouts.In short, having hurt its credibility with investors, Oxy still has a lot to prove in winning it back. And as next year’s guidance shows, that finely balanced dividend yield will have to do much of the work in the meantime.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Venezuelan state oil company PDVSA and Chevron Corp plan to turn their joint venture Petropiar plant back into a crude upgrader, after months operating as a less complex blending facility, three people familiar with the operation said. The companies plan to begin producing Hamaca-grade synthetic crude for export at the plant early next year, said the people, who spoke on condition of anonymity this week.