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California-based integrated energy company Chevron Corporation (CVX - Free Report) recently issued a statement on its annual analyst day bringing in pleasant news for investors. The company maintained its guidance related to production, margins and other details along with emphasizing on its growing free cash flows.
2017 Outlook
Chevron expects to achieve its objective of becoming cash balanced in 2017 and plans to enhance its free cash flows in the years thereafter. Strong balance sheet, reduced estimated spending and higher projected margins will most likely enable the company to maintain its dividend growth.
The company intends to reduce its capital expenditure in the coming years. The capex budget for 2017 is set at $19.8 billion, down almost 12% from the year-ago figure. The capex for 2018–2020 is estimated to be around $17–$22 billion. 75% of Chevron’s capex is estimated to generate cash within the next two years.
The company also plans to lower its operating costs that includes selling and administration expenses for 2017. It plans speed up the completion of projects under construction and intends to focus on the short cycle, high return investments from its advantaged portfolio. The company will increase its spending on shale and tight gas projects and capitalize on brownfield opportunities. It also plans to divest assets worth $5–$10 billion in 2016–2017.
Declining oil reserves have become a major concern for energy companies. However, Chevron stands strong with its high reserve replacement ratio of 95%.
Net production is expected to witness 4–9% growth in 2017. Various projects like Gorgon and Wheatstone are shaping up well and the company aims to accelerate growth and development in the Permian Basin, projecting a production of 700,000 barrels per day within a decade.
Production growth implies cash flow growth which in turn will boost dividend. Chevron’s strong financial position and its commitment to return capital to shareholders make the company well positioned to hike its dividend. Boosting the dividend has always been among one of the top priorities for Chevron, corroborated by the fact that the company has raised its annual dividend for 29 consecutive years.
Zacks Ranks and Key Picks
Chevron is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.
The company has outperformed the Zacks categorized Oil & Gas-International Integrated industry over the prior six months. During the aforesaid period, shares of Shell rallied almost 8% while the broader industry gained around 1.7%.
However, the company posted a negative earnings surprise of 65.63% in the last quarter. Moreover, in the trailing four quarters it has reported average negative earnings surprise of 16.46%.
The company currently carries a Zacks Rank #3 (Hold).
Eni expects to deliver year-over-year growth of 746% in its earnings in 2017.
Repsol reported average positive earnings surprise of 46.34% in the last four quarters.
Shell is expected to post year-over-year growth of 110.46% in its earnings in 2017.
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Chevron (CVX) Declares Growth Plans, Issues 2017 Guidance
California-based integrated energy company Chevron Corporation (CVX - Free Report) recently issued a statement on its annual analyst day bringing in pleasant news for investors. The company maintained its guidance related to production, margins and other details along with emphasizing on its growing free cash flows.
2017 Outlook
Chevron expects to achieve its objective of becoming cash balanced in 2017 and plans to enhance its free cash flows in the years thereafter. Strong balance sheet, reduced estimated spending and higher projected margins will most likely enable the company to maintain its dividend growth.
The company intends to reduce its capital expenditure in the coming years. The capex budget for 2017 is set at $19.8 billion, down almost 12% from the year-ago figure. The capex for 2018–2020 is estimated to be around $17–$22 billion. 75% of Chevron’s capex is estimated to generate cash within the next two years.
The company also plans to lower its operating costs that includes selling and administration expenses for 2017. It plans speed up the completion of projects under construction and intends to focus on the short cycle, high return investments from its advantaged portfolio. The company will increase its spending on shale and tight gas projects and capitalize on brownfield opportunities. It also plans to divest assets worth $5–$10 billion in 2016–2017.
Declining oil reserves have become a major concern for energy companies. However, Chevron stands strong with its high reserve replacement ratio of 95%.
Net production is expected to witness 4–9% growth in 2017. Various projects like Gorgon and Wheatstone are shaping up well and the company aims to accelerate growth and development in the Permian Basin, projecting a production of 700,000 barrels per day within a decade.
Production growth implies cash flow growth which in turn will boost dividend. Chevron’s strong financial position and its commitment to return capital to shareholders make the company well positioned to hike its dividend. Boosting the dividend has always been among one of the top priorities for Chevron, corroborated by the fact that the company has raised its annual dividend for 29 consecutive years.
Zacks Ranks and Key Picks
Chevron is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.
The company has outperformed the Zacks categorized Oil & Gas-International Integrated industry over the prior six months. During the aforesaid period, shares of Shell rallied almost 8% while the broader industry gained around 1.7%.
However, the company posted a negative earnings surprise of 65.63% in the last quarter. Moreover, in the trailing four quarters it has reported average negative earnings surprise of 16.46%.
The company currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same industry include Eni SpA. (E - Free Report) , Repsol SA (REPYY - Free Report) and Royal Dutch Shell PLC . All the three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Eni expects to deliver year-over-year growth of 746% in its earnings in 2017.
Repsol reported average positive earnings surprise of 46.34% in the last four quarters.
Shell is expected to post year-over-year growth of 110.46% in its earnings in 2017.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>