Chevron cannot outlast this storm paying the dividend. Even not paying the dividend, we are vulnerable. Nthe Moody's downgrade is only a sign of things to come. When we are unable to divest assets, the pressure inreases. The divestmest goal of getting fair market value that Watson trumpets is misleading. The markets sets value, not Chevron's management. The whole operation rests soundly on the hope that prices recover in 2 years or less. The next thing you see will not be another ROM or ESP, it will be the elimination of ETC at the fiscal year close and wholesale closure of 2-3 BU's to follow. These plans are already in-place and are being considered as near-term contingencies. Brick and mortar asset appraisers are already making the rounds in Houston, Covington and Moon Township. All to pay a financially unsound dividend. New leadership that embraces reality and is not tied to the legacy of failed mega-MCPs is needed and needed now.
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I always felt ITC and ETC were mismanaged, especially ETC. They used to have big budgets and spent $$ like it was water a few years ago.
Then John Watson, aka "Mr. $100 oil is here to stay", must be the Grand Poobah of dofuses.
Anybody who claims to know oil prices 5 years out is a doofus.
Glad the company has so many folks in the know.
The way oil and gas fundamental look right now and taking into account the most likely economic scenarios, oil prices will not surpass a weekly sustained price of $47 in the next 5 years. Low oil and gas prices have become the new normal for at least that long. Chevron and other large O&G companies are in for more pain.
30 dollar oil will not last 5 years. And if etc, uc, prc and similar are reduce to 25% then they should be combined to keep them from being overly top heavy.
ITC, ETC, PGPA, HR, HES, PRC and CBRES are Chevron's wasteful and miss-managed organizations. Name the three worst areas that need to be gutted.
As oil prices begin to rise, for whatever reason, United States fracking companies will start producing more oil and gas. Innovations in fracking technologies have lowered the costs in this sector to a point where margins are lower. So the premise that foreign governments will soon have control or greater influence to raise oil prices is not completely true. As prices go up, fracking operations in the US will pick up, thus counteracting global oil market prices. There is an equilibrium factor in economics that also apply to oil markets. In summary, low oil and gas prices is now the norm.
Low crude prices are not in the best interests of Russia, the Saudis, OPEC in general,.... even Iran. Believe that's going to be the primary impetus for getting crude prices back to an economically acceptable (to producing nations) level. Certainly, some "gamesmanship" is likely to continue, but neither Russia nor the Saudis can afford a protracted period with prices this low.
It has been announced. Roy K is coming back to the states in a few months.
I have it under great authority that ETC and PRC both will be downsized to 25 and 35% respectively by 1Q 2017. If oil price rises to $45 then the numbers are 45% and 55% respectively. If $60 then 65% and 65% respectively. PRC is already eliminating and demoting several management folks on projects because they were asleep at the wheel and allowed their projects to significantly increase CAPEX or slip schedule. Good riddance - its called accountability (a foreign word in Chevron culture). Melody Meyer was let go because she was a poor leader who did NOTHING to stop the bleeding on Gorgon and Wheatstone. I expect to see Roy K. be demoted or pushed out by summer.
Maybe it will make it's way down to $20.
Apparently some in the marketplace agree......
http://www.fool.com/investing/general/2016/02/25/forget-chevron-corporation-here-are-3-better-divid.aspx