The following evaluation is for Chevron Corporation. Chevron is one of the world’s leading integrated energy companies, which explores for, produces and transports crude oil and natural gas, refines, markets and distributes transportation fuels and lubricants. Additionally, the company manufactures and sells petrochemicals and additives, and develops and deploys technologies enhancing business value (Chevron, 2018 Annual Report xii). Thus, Chevron Corporation operates in three sectors of oil and gas industry: upstream (i.e., exploration and production), midstream (i.e., transportation and marketing), and downstream (i.e., refining and processing of oil and natural gas). Chevron Corporation is a public company since its ownership is distributed among general public shareholders, and its shares are traded on the open stock market. As of 2018, the company has been more dependent on demand for raw and processed natural gas as a source of affordable and clean energy.
Chevron is a global energy company with headquarters in San Ramon, California and business activities in the following countries: Angola, Argentina, Australia, Azerbaijan, Bangladesh, Brazil, Canada, China, Colombia, Denmark, Indonesia, Kazakhstan, Myanmar, Nigeria, the Partitioned Zone between Saudi Arabia and Kuwait, the Philippines, Republic of Congo, Singapore, South Korea, Thailand, the United Kingdom, the United States, and Venezuela (Chevron, 2018 Annual Report 28). According to the Corporate Fact Sheet, Chevron is the second-largest integrated company in the United States and among the largest in the world as of 31 December, 2018 (Chevron, Corporate Fact Sheet 1).
Oil supply growth rates have decreased from 2.5 million barrels per day in 2014 to about 0.5 million barrels in 2017, while the demand is still robust, with 1.5 million. The price of oil has strengthened from $40 to $70 per barrel (Strategy& 5). Overall, the industry has recovered from the price collapse of 2014-2016, but companies still need to develop a resilient strategy to mitigate the risks associated with oil and gas activities. As for the company’s revenue growth, it has decreased by 8.02%, while competitors’ revenue growth rate increased by 1.25% by 2019. Chevron Corporation’s net income grew 25.37% faster than the average growth rate of its competitors (CSI Market). The company has substantially grown since 2015 with the help of its development projects in Japan, Australia, and several countries in Africa, as well as continued production of oil and gas in the Gulf of Mexico and the Permian Basin of the southwestern United States. Since 2015, Chevron’s downstream segment provided a profit of $7.6 billion (Chevron, History). Thus, the company has become a leading global producer of oil and gas.
For the past three years, Chevron has succeeded in several ways, including the exploration success rate of 61 percent with 11 discoveries worldwide, and added 2.4 billion barrels of oil resources and 1.3 million net exploration acres in the U.S., Brazil, and Mexico. It also achieved production of 2.93 million net oil-equivalent barrels per day in 2018, or more than a 7 percent boost compared to the data of 2017 (Chevron, Corporate Fact Sheet 1). Chevron Corporation anticipates significant success in cash flow growth, moderate spending, and increased production for the next four years.
Based on its strong performance, the company expects capital and exploratory expenditures of $19 to 22 billion from 2021 to 2023, three to four percent compound annual production growth through 2023, the Permian production of 900,000 barrels per day in 2023, as well as 6 percent shareholder yield in 2019 (Chevron, Chevron Outlines Strategy for Disciplined Growth and Higher Returns 1). For the upcoming years, the company plans to invest in people to empower the competent workforce, to achieve operational perfection and cost efficiency in upstream, midstream, and downstream sectors, and to greatly increase profits and returns.
Works Cited
Chevron. Chevron Outlines Strategy for Disciplined Growth and Higher Returns. 2019, Web.
Corporate Fact Sheet. 2018, Web.
History. 2019, Web.
Annual Report. 2019, Web.
CSI Market. CVX Sales vs. Its Competitors Q2 2019. Web.
Strategy&. Strategy Shaped by Volatility: Oil and Gas Trends 2018-19. Web.