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Can Chevron (CVX) Flourish With Michael Wirth at the Helm?
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U.S. energy giant Chevron Corporation (CVX - Free Report) recently announced plans to appoint Michael K. Wirth as the CEO and chairman as the company seeks managerial changes to deal with the volatile dynamics of the oil industry. Wirth, who is currently the vice chairman of the company, will take over as the CEO from Feb 1, 2018. He will be replacing John Watson who has served the company as the CEO for the last eight years.
Watson was appointed as the CFO in 2000 and five years hence he became the president of the company’s International Exploration and Production operations. Later in 2009, he was named as the chairman and the CEO of Chevron. During his tenure, he focused on three major strategies. These included the acceleration of the development of Chevron’s Permian holdings, cost-cut initiatives amid the industry downturn and planned completion and execution of mega projects. Watson succeeded on boosting the Permian activities by enhancing production and returns. The company owns substantial acreage in the Permian Basin and has also increased its production target for 2020 by 30%.To cope with the oil slump, Watson resorted to retrenchment strategies, cost cuts, project cancellations and divestments to shore up financials.
However, persistent weakness and volatility in oil prices pose challenge to the upstream operations of the company as it is not being able to sell crude at viable prices and is unable to generate significant cash flows for shareholders. Chevron being an integrated player, is thus trying to increase its focus on downstream business which can be profitable in the current environment.
In our opinion, Wirth’s appointment is a sound choice, given his substantial knowledge and experience regarding refining and petrochemicals. With the election of Wirth as the CEO, Chevron will follow the footsteps of energy majors like Exxon Mobil Corporation (XOM - Free Report) , Royal Dutch Shell plc and TOTAL S.A. , all of whose CEO’s are refining specialists.
Wirth joined Chevron in 1982 and became the vice chairman earlier this year. He has spent around 10 years as the executive vice president of Chevron's downstream and chemicals business. To exit non-competitive projects, Chevron divested downstream assets in Canada to Parkland as part of Wirth's strategy. It also lowered the company’s operating and capital costs. Apart from providing a leaner business model, it helped Chevron to progress toward its $5-$10 billion divestment goals for 2016-2017.
Refining operations are critical to protect the balance sheets of integrated companies during weak crude environment. The company believes that Wirth’s expertise and experience will help the company to control costs at big fuel- and chemicals-processing plants and improve results from its downstream segment.
The company also announced another executive leadership change by naming Mark A. Nelson as the new vice president of Midstream, Strategy & Policy with effect from Feb 1, 2018. Nelson will henceforth supervise Chevron’s supply and trading, shipping, pipeline and power operating units along with corporate strategy and public affairs.
Chevron currently carries a Zacks Rank #3 (Hold). Over a year, shares of Chevron have rallied 14.7% compared with roughly 8.8% gain recorded by the industry.
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Can Chevron (CVX) Flourish With Michael Wirth at the Helm?
U.S. energy giant Chevron Corporation (CVX - Free Report) recently announced plans to appoint Michael K. Wirth as the CEO and chairman as the company seeks managerial changes to deal with the volatile dynamics of the oil industry. Wirth, who is currently the vice chairman of the company, will take over as the CEO from Feb 1, 2018. He will be replacing John Watson who has served the company as the CEO for the last eight years.
Watson was appointed as the CFO in 2000 and five years hence he became the president of the company’s International Exploration and Production operations. Later in 2009, he was named as the chairman and the CEO of Chevron. During his tenure, he focused on three major strategies. These included the acceleration of the development of Chevron’s Permian holdings, cost-cut initiatives amid the industry downturn and planned completion and execution of mega projects. Watson succeeded on boosting the Permian activities by enhancing production and returns. The company owns substantial acreage in the Permian Basin and has also increased its production target for 2020 by 30%.To cope with the oil slump, Watson resorted to retrenchment strategies, cost cuts, project cancellations and divestments to shore up financials.
However, persistent weakness and volatility in oil prices pose challenge to the upstream operations of the company as it is not being able to sell crude at viable prices and is unable to generate significant cash flows for shareholders. Chevron being an integrated player, is thus trying to increase its focus on downstream business which can be profitable in the current environment.
In our opinion, Wirth’s appointment is a sound choice, given his substantial knowledge and experience regarding refining and petrochemicals. With the election of Wirth as the CEO, Chevron will follow the footsteps of energy majors like Exxon Mobil Corporation (XOM - Free Report) , Royal Dutch Shell plc and TOTAL S.A. , all of whose CEO’s are refining specialists.
Wirth joined Chevron in 1982 and became the vice chairman earlier this year. He has spent around 10 years as the executive vice president of Chevron's downstream and chemicals business. To exit non-competitive projects, Chevron divested downstream assets in Canada to Parkland as part of Wirth's strategy. It also lowered the company’s operating and capital costs. Apart from providing a leaner business model, it helped Chevron to progress toward its $5-$10 billion divestment goals for 2016-2017.
Refining operations are critical to protect the balance sheets of integrated companies during weak crude environment. The company believes that Wirth’s expertise and experience will help the company to control costs at big fuel- and chemicals-processing plants and improve results from its downstream segment.
The company also announced another executive leadership change by naming Mark A. Nelson as the new vice president of Midstream, Strategy & Policy with effect from Feb 1, 2018. Nelson will henceforth supervise Chevron’s supply and trading, shipping, pipeline and power operating units along with corporate strategy and public affairs.
Chevron currently carries a Zacks Rank #3 (Hold). Over a year, shares of Chevron have rallied 14.7% compared with roughly 8.8% gain recorded by the industry.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>