“Chevron (NYSE:CVX) disclosed Tuesday it will book $3.5B-$4B in charges for Q4 on some of its U.S. upstream assets, primarily in California, citing regulatory challenges that have resulted in "lower anticipated future investment levels in its business plans," even as the company said it will continue to operate the affected assets for many years.“
https://seekingalpha.com/news/4051592-chevron-sees-up-to-4b-on-impairment-of-us-upstream-assets
What everyone is missing here is that write-downs of this magnitude are an admission of significant failure by the company, a mea culpa few companies want to invoke. Write-downs are a direct negative impact on market value, which will eventually negatively impact stock price. It's not an instantaneous effect, so please don't tell me what Chevron stock did or didn't do after the announcement. SR and MW will soften or negate the impact on stock price by launching more stock buy-backs.
@OP Chevron executives blame California, where they have less than 10% of their global business, for a $4B write down. Seems legit.
They left out the part where they returned $100B to shareholders and made record profits. Only you know why you believe anything these executives tell you.
So Chevron will take a $4B write down in the 4Q 2023? They can spin the reasons anyway they like. I don’t think they’re admitting to the Hess acquisition price tag as part of that decision, but in reality, it has lots to do with taking the write down for 2013— to start 2024 with a clean slate. We’re not so blind to see this, Chevron!
Our stock tracks oil prices as we are oiler than competitors (not a good thing). We should have popped up with oil today a lot more than we did. These writedowns make us a laughingstock. Next the reserves will come off the books and the death spiral continues.
@1dga great conspiracy theory; however, look at the market today and how CVX stock reacted to the news.....seems it did not play that way. Higher vs. peers.
"...even as the company said it will continue to operate the affected assets for many years..." Translations: 1) we'll (continue to) ignore this sticky mess and let EB handle the blowback of the next $$$ billion write-downs. The lawsuits alone will make Ecuador look like a jaywalking ticket. 2) SJVBU is now 'officially' a dead-end BU. You'll be operating on minimal maintenance OPEX only. Skills and experience developed there are transferable nowhere inside or outside the Company. Anyone there under 50 better have an exit plan, and act on it as soon as possible.
MW forced PB to do this in order to crash the stock ahead of the 2024 stock grant date (Jan 31) so the CVX share price will be at a low on the grants. When it rebounds MW and others with massive stock grants will make massive "profits" in their personal bank accounts. This has happened quite a few times that management games the system to crush the price for grant day then juice it late in the year when it is a good time to sell grants and they are rewarded for a TSR Dec 31 beating the competition.
ExxonMobil left developing in the GOM years ago. Seems Chevron should have done the same.
When is Chevron going to move their Corporate office to Texas? Why do you keep supporting this insanity. Make a statement and get out of that cr-ppy state.
Is there a history of a 0.0 CIP?
Maybe this is the time for new records?
CIP 0.50 coming
Bingo! It’s becoming a game of who’s left holding the bag for abandoning. And estimate $100k per well, not counting any clean up cost.
It’s not an oil field, it’s money hole. This slow walking it’s wind down until we’re all dead.
Is CVX on the hook for abandoning all of those wells? There’s about 20,000 in SJV. What other operator would buy such a liability, especially with the political environment and permit lockdown?
Seems crazy to sell wells to a company who has no money/future going foward....oh well nice CVX!!
Crazy like a fox. Earnings were sh-t - they figured they could drop this now and get all the cumulative bad news out and take the hit at once.
They need to figure out the exit strategy for CA upstream asap. Right now we operate it because it’s cheaper than closure and reclamation. But kicking it down the road is only going to drive the cost up. This a time bo-b.
Believe me, if Chevron could get out of California, it would. We're stuck there, though. Should have sold out years ago, but then again, maybe they tried. Consider this - marginally profitable (it at all) heavy oil resources with rapidly declining production and reserves, facing $$$$ decommissioning costs. However, there's also our headquarters office of upper management who love to mingle with the SF art crowd and the Berkeley wine-and-cheese set (who not-so-secretly hate everything about Chevron).
As for GOM, yes, this is just another of their many keystone kops business blunders. It accounts for them dropping in less than a decade from most-envied and best-funded BU in the company (well, DWEP) to surviving on minority farm-ins to piddling NOJVs. Oh, and they gave us alumna Liz to head "exploration". Strange, as no one in the Shelf GOMBU ever explored for anything other than getting out of Covington.
It’s an excuse to bash the state. They could easily perform all low carbon work in the state as there is a regulatory framework to make it work. Just excuses as usual.
Another colossal financial blunder. How do $4B in write-downs appear overnight while oil prices are high? It is unheard of. As government conditions in Calif worsened the last 10 years this should have been done gradually. Instead, management kicked the can down the road every year until it became too big to hide. PB owns this fiasco head long term head of Finance.
In the GOM, the booobs in the BU couldn't manage the fields and then BD sold them to a weak company that went under and we are left holding the bag. This is another nail in the coffin for GOM which has not turned a net profit long term when you total up all the exploration + dev + abandonment costs. We should have left the Gulf years ago.
Our stock will get crushed because both moves make us look like dunderheads.
More justification for a low CIP. A hit to earnings of $4 B. But cmon its an impairement.