Chevron Is Expanding Operations in Venezuela. How to Play CVX Stock Now.
Integrated oil and gas company Chevron Corporation (CVX) is expanding its operations in Venezuela. This news comes days after President Trump announced that the administration has entered into a sweeping agreement with Venezuela that gives the U.S. domain over vast amounts of untapped oil reserves in South America.
Venezuela’s acting President Delcy Rodríguez’s government said the deal involves developing 17 fields with a proven potential of 65 billion barrels. The deal also gives the U.S. 55% of the new private company's effective output, along with an ownership stake and rights to buy oil at cost.
Chevron has a longstanding and major presence in the country. Now, its presence is being bolstered as it has been assigned additional acreage in the Orinoco Belt. This also underpins Chevron’s joint venture plans to invest over $7 billion over the next five years, more than doubling production to approximately 600,000 barrels a day compared to the current year.
Mike Wirth, Chevron Chairman and CEO, said this deal strengthens a portfolio that can deliver attractive low-cost oil growth, support energy supply, and create differentiated long-term value. At this juncture, CVX stock might be the energy stock to watch.
About Chevron Stock
Chevron is an integrated energy company engaged in exploring, producing, and transporting crude oil and natural gas. It also refines and markets gasoline, diesel, lubricants, and other energy products. The company manufactures petrochemicals, additives, and specialty products while developing technologies to improve energy production and reduce emissions.
Chevron operates across major energy-producing regions and serves customers worldwide through its fuel stations, refineries, and industrial businesses. Its operations also include lower-carbon energy projects, such as renewable fuels, carbon capture, and hydrogen. Chevron is headquartered in Houston, Texas, and is one of the largest integrated energy companies in the U.S. The company has a market capitalization of $415.43 billion.
Chevron’s stock has risen over the past year mainly because higher oil prices, stronger production, and the Hess acquisition have improved the company’s earnings outlook. Over the past 52 weeks, CVX stock has gained 32%, while it is up 37% year-to-date (YTD). It reached a 52-week high of $214.71 on March 30 and is only down marginally from that level.
On a forward-adjusted basis, Chevron’s price-to-earnings (non-GAAP) ratio of 13.29x is only marginally higher than the industry average of 13.25x.
Chevron Q2 Profit Surges on Higher Oil Prices
Chevron’s second-quarter total revenues and other income increased 56.3% year-over-year (YoY) to $70.06 billion, based on sales and other operating revenues rising by 51.4% annually to $67.20 billion.
The company realized an average Brent spot price of $104/bbl, up from $68/bbl in the prior-year period. As a result, Chevron’s total earnings climbed 384.8% YoY to $12.07 billion. Its upstream earnings reached $8.18 billion, while downstream earnings rose to $4.87 billion. The company’s adjusted EPS increased from $1.77 to $6.06 YoY. Its return on capital employed reached 21.4% during the quarter.
Analysts believe Chevron can further improve its bottom line. For the current year, Chevron’s EPS (on a diluted basis) is expected to grow 122.8% YoY to $16.24, followed by a 12.8% drop to $14.16 for the next year. For the current quarter, analysts expect the company’s EPS to climb 155.1% YoY to $4.72.
Here’s What Analysts Think About CVX Stock
Last month, Morgan Stanley analyst Devin McDermott maintained a bullish “Overweight” rating on CVX stock and raised the price target from $210 to $218. Analysts at Barclays maintained Chevron’s rating at “Equal-Weight” while lowering the price target from $216 to $208, exhibiting a cautious outlook amid fluctuating oil prices and market conditions. TD Cowen analysts raised Chevron’s price target to $205 from $200 while maintaining a “Hold” rating.
Wall Street analysts are taking a positive stance on CVX stock now, with a consensus “Moderate Buy” rating overall. Of the 26 analysts rating the stock, 17 analysts gave a “Strong Buy” rating, three analysts gave a “Moderate Buy” rating, while five analysts are playing it safe with a “Hold” rating, and one analyst gave a “Strong Sell” rating. The consensus price target of $220.22 represents a 6% upside from current levels. Moreover, the Street-high price target of $243 indicates a 17% upside from current levels.
On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.