U.S. energy behemoth Chevron Corporation (CVX - Analyst Report) paid $10 million in claims, arising from the massive fire outbreak on its No. 4 Crude Unit of Richmond refinery on Aug 6, 2012. The amount was paid against medical compensation claims.
To date, the company has received 23,900 claims since the date of accident, according to a letter that Chevron officials sent to the Contra Costa County Hazardous Materials Program – a health department that serves local residents in case of emergencies.
Chevron suspended its operations at the No. 4 Crude Unit of Richmond refinery after the fire outbreak. The unit performed the initial refining activities of the crude oil that arrived at the refinery.
The devastating fire sent more than 15,000 people to emergency rooms, while some 200 people sought medical help due to respiratory problems. The 245,000 barrel a day unit – accounting for one-eighth of the total refinery capacity of California State – has been operating at 50% capacity since the date of the accident.
Chevron is almost through with repair work at its Richmond, California, refinery crude unit. The facility is expected to be online by the first quarter of 2013.
San Ramon, California-based Chevron displays a strong portfolio of global projects, targeting volume growth of around 20% by 2017. Additionally, Chevron possesses one of the healthiest balance sheets among its integrated peers, which include companies like BP plc (BP - Analyst Report), ExxonMobil Corporation (XOM - Analyst Report) and Royal Dutch Shell plc (RDS.A - Analyst Report). Chevron’s balance sheet strength helps it to capitalize on investment opportunities with the option to make strategic acquisitions.
The company’s financial flexibility and strong balance sheet are real assets in this highly-uncertain period for the economy.
However, Chevron’s production growth profile depends on the timely development of upstream projects, almost all of which have inherent risk factors. Time and cost overruns on these programs may lead to lower returns going forward.
Chevron currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.