When will CVX go bankrupt with these low oil prices and no signs of oil prices increasing? In 1 to 2 years?
28 replies (most recent on top)
It's you -9oir that has no clue. This is the real world we're in, not a dream.
You don't have a clue kvd. Not about the real economiccs of our business or company, and definately not about how M&As work.
Wrong analysis -8tal. You're forgetting CVX has a piss poor cash flow position. Even after trimming the fat to the bone due to hypothetical $12 oil, our company won't be able to buyout anyone. And why would they? To get more $12 producing acreage? Get real. CVX better address the dividend situation first, which is the albatross around its neck.
Nice analysis and positive viewpoint -8tal. Let the dividends roll in my brother!
But in reality, at $12bbl Cvx would be in the driver's seat to aquire massive amounts of producing acreage. Remember, it would not only be $12 for Cvx, but also for Xom, Rds etc. looking at todays comparitive DFLC and footprint, Cvx would actually be in the driver's seat to exploit a volume market. With no new development at the price range supply/demand would invert rapidly, and again Cvx would be in the driver's seat to exploit what would now become a price market. It happened before, coming out of the 80s into tbe 90s, when Cvx made what some cosidered to be questionable aquisitions, and then went on to lead in ROCE for a decade.
I wont bet on a Chevron bankruptcy ever happening. If oil was to go down to $12 and not have the likelihood of increasing for some time, I'd expect the pain of that would force Chevron to sell off a lot more assets, layoff more of its staff, cut back 100% on benefits and frills. By the time it feels it has downsized sufficiently to withstand $12 oil, that's when you'll hear that another company bought us out. We would no longer be a big fish, just another one getting devoured. Pray that oil doesn't end up at $12.
BTW, if anyone wants to debate this bring your "A" game.
You probably don't want to hear this, but Chevron would still be solvent at around $12 per bbl. Dividends, no, growth, no, high stock prices, no, CIP, no, but solvent, yes. You clearly know zero about the economics of big oil in general and Chevron in particular.
Answer to @6qxe: All of them.
@4ibv gets it. How many smaller, more efficient companies have been swallowed by Chevron only to be suffocated by all the processes and procedures?
Similar to the Borg Commune in Star Trek. Resistance is futile to the Chevron Way.
@4bbg, I'm not sure that Chevron will buyout any other company, but if it does happen, I'm pretty convinced it won't give Chevron access to superior technology, knowledge and expertise than they currently have. If Chevron buys out another company, it will ruin that company's former successes and strengths with the "Chevron Way". After a short while, it will be blended into what we see Chevron is today, a failing business model because of its emphasis on political correctness, social engineering and failure to institutionalize employee accountability.
Chevron will not go bankrupt. It is more likely to make an attempt to acquire one or more smaller, more efficient and productive, oil companies operating in the Permian basin. This will not only increase their acreage, but more importantly, give Chevron access to superior technology, knowledge and expertise than they currently have.
Since oil is around $42-43 at the moment, calling that it will hit high $30's is really going out on a limb.
@NQboOAC-3zvy, Sorry to hear that, buddi. We will miss you. Keep your head up, pal. Some folks in other industries are starting to hire again.
3zvy, Several analysts specializing in oil futures are expecting oil to go down into the high 30's before long. It's a cyclical problem with no short term solution. Oil will go down then back up, but won't break $60 for at least 3 years. In this environment, it's obvious that Chevron and others in the biz will be laying off personnel again. The PDC in the fall will be the beginning of musical chairs one more time of several more to come.
Bank of America predicts oil to trade in the $30s this year. The family and friends will have to back stab thousands more deadwood employees.
1riu, you nailed it. I'm copying your comment into a new thread. Hope you won't mind.
Oh, dead wood. That's original.
Chevron should have no problem staying solvent after the next round of cutting out the Dead Wood.
Everyone currently working for Chevron wants to continue working here. Why? Answer: Why not. The pay and benefits are great, practically exceptional. The job is not overly difficult. The majority of workers don't have to work weekends and holidays. Last of all, employees are very rarely held accountable for ineptitude. -- All current employees would gladly stay onboard until the company closes its doors forever.
Chevron is toast. The good people have left or will be looking to leave soon, because who wants to work for a dying company? High oil prices cover inefficient and incompetent operations, but prolonged low prices expose the weaknesses.
A vast majority of the Fortune 500 companies from 20 years ago are no longer in business today... In short, companies, even great companies, go out of business despite predictions otherwise. Why is Chevron any different ?
Chevron continues doing what it has been trying to do for too long. Anymore of this without thinking differently will result worse for the company. The common denominator in all this is JW. The CEO needed to be changed and so will the direction of the company. Enough already with our failing business model.
All new college graduates need to read this blog and avoid this company like the plague. There is no long term futures
If business remains weak, we will have no choice but to continue selling weaker assets at fire sale prices. The problem is most of the rotten assets are gone and we have stepped up to selling entire profit centers (Trinidad, Bangladesh) and Business units (GOM). It doesn't take a genius to figure out what could be sold next.
Three scenarios - 1) prices recover and we are fine. 2) prices remain weak as we sell assets, stop operations and shrink the whole company until XOM buy us. 3) prices fall as our industry is disrupted and we all go out of business except for maybe XOM which Tesla buys for charging location network.
Very simplistically, in the height of construction 2015-16 it was issuing $10B of debt a year, and it has a market cap of $200B. If that's all that mattered and everything stayed constant 20 years. In reality Capex will be down, but assets may depreciate over the long term if reserves become worthless with prevalent renewables. Anyway not in the next few years:)
The day after your d--k shrivels and falls off ... then again, from the looks of you, that might not be far off. Maybe I should sell selll selll!