The real problem with the lay-off's we are seeing at Chevron and all oil and gas company's is just a symptom. The real problem is the huge debt Chevron and others has gotten itself into anticipating oil's continually rise.Where do you think all this cheap money has come from...0% interest since what 08. Also over leveraged balance sheets.....just moves these numbers around again that's just fine. Just wait till Iran's oil come flooding back on the US market from that genius nuclear deal..notice gas prices coming down, HMMM!!! weird I know right. I wonder what Chevron will have to do when oil goes to 30 or 20 dollars a barrel. The last nail in the layoff coffin is when the rest of the world wakes up and realizes we are even more broke then they are.Think for a moment about this. WE ARE THE BIGGEST DEBTOR NATION IN THE HISTORY OF THE WORLD. It's going to get real people, we better start hunkering down. The lay-off's are just warming up. Pay off debt, get real money like Gold and Silver (The Physical stuff). Gold will have to account for the stupid financial mess our government has gotten us into and that Chevron has played into. History don't' lie people. LET THE FUN BEGIN!!!
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Oil just hit a 6 yr. low, now flirting with $30 dollars a barrel. Oil should get a dead-cat bounce out of this when the dollar drops. Then grab your ankles and kiss the ass of the person in front of you cause he is in the same pickle you are.
Oil will get to 30's by end of year. Looking st us and world inventories that is a pretty safe bet!
Short WTI...see you when it gets to 20 a barrel
Chevron earnings from U.S. downstream operations rose about 41 percent to $731 million, due to higher margins on refined product sales. This is going to come to a screeching halt. Downstream distillates are going to have a glut of supply. 41 percent is not sustainable even in the short run. Cut that in half and Chevron is a billion in the red on the net income side. And the jackass who try to explain away Chevrons issues with a debt to equity ratio needs to understand what the previous poster is talking about when it comes to expenses. Accrual accounting is a sham...it's a sham across the board so you can compare apples to apples but its free cash flow. Chevron committed to pay the dividend from free cash flow 2017. Oh wait they said Gorgon would be up and running and Big foot and the Marcellus Shale BU.....oh yea that's right!
Anonymous137125 That is backed up by facts. And yes cash flow is the problem. Paying interest on debt or expenses to get a must done MCP have the same outcome. Money out!
Well said Anonymous137125 gold star for you. People are in La-La Land who think otherwise.
Problem is liquidity. Accrual accounting makes it very difficult to see cash.....the income statement and balance sheet were the only two financials required. The accounting standards board knew this and then in 1987 issued standard 95 "Statement of Cashflow" which then was one of the required statements to be reported with the income statement and balance sheet. Cash is king in operations as you can't pay the light bill with an asset. Chevron has billions of dollars in expenses with no cash coming in. They loose 320-350 million dollars a quarter or 1.4 billion a year in cash in every 1 dollar drop in the price of oil. They can borrow or do another bond offering as they did in February to ensure the dividend was covered. But the cash flow is pushing Chevron to the precipice. As the financials deteriorate Chevron will pay a higher interest rate because of risk. They have lost 30 billion alone in Market cap with the sliding stock price. Many people use the term debt to also look at expense. Not proper in Accrual accounting but does mean that they have major expenses on MCP. With interest rates so low (Money is close to inflation rate) they could of leverage and paid the expense on the debt. Chevron and the rest of the oil patch never thought 50 dollar oil would stay around for years....Watson was very outspoken about this when taking on these projects. Also the margin that drove price inflation on energy was a tiny sliver of demand from the U.S. That demand is now covered by shale. The wells are open and producing and covering that demand. The Saudi's in response keep producing more oil to see where this break even point is with shale. MCP are not seen as prudent. With the shale boom you can produce with zero leverage. rent a rig and frac crew....why invest in billions when you can invest a few million and get a return without billions and billions in capital. Someone said we are in the eye of the hurricane......no no no....bad analogy.....there is a tsunami about to hit Chevron....a Tsunami of expenses that they will not have the cash for.....but I think the most fundamental issue is extremely poor leadership. Do you think Gorgon will go on line without a hitch? Chevron sunk Buoys that were unsinkable on bigfoot! That's going to be the death of Chevron....not poor but zero execution. And to look at debt load being low with billions of expenses and saying somebody has an agenda and ignoring the above shows a very strong case of being naïve to basic financial health.
Not sure what your agenda is... But basically everything you say is not backed up by facts, not even close. Iran can pump all the oil they want, but they can't flood the market anytime soon, no way to get it to there. Second, Chevron's capital spending has mostly been funded by cash generated from operations, not debt...even with this mess we're in, we still have one of the lowest debt to equity ratios of all energy companies globally. $31 billion total debt. To put that into perspective, Puerto Rico, the tiny US Territory, has $70 billion in outstanding debt. Greece has about $350 billion. So I know I'm not going to change your opinion, you think the world is going to end and will believe anything that confirms your belief, but at least I want put some facts out there so other people reading this can intelligently decide if they want to follow you into your Bunker of doom.
Oil is also a physical asset