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Chevron Q1 Preview: GoM & LNG

Summary

Chevron Corporation is getting ready to report its Q1 2016 earnings on April 29, which will be followed up closely by its annual shareholders meeting in May.

Investors should look for any comments regarding its newfound Sicily prospect in the Gulf of Mexico.

The LNG trifecta, as usual, is on tap once again as the Angola LNG facility gets ready to start up again while the Gorgon plant is temporarily offline.

Chevron Corporation (NYSE:CVX) reports its Q1 2016 earnings on April 29, which will be followed up by its annual shareholders meeting the following month. Management will issue out plenty of updates as Chevron enters what could be the beginning of the beginning of the recovery in energy prices. Here are a few items to look out for.

Gulf of Mexico updates

Since turning the Jack and St. Malo fields online in the Gulf of Mexico back in December 2014, Chevron has ramped up production from the development to ~75,000 BOE/d (heavily weighted towards crude). Both fields are estimated to house a combined ~500 million BOE of recoverable resources, supporting a solid long term production stream. By the end of 2016, Chevron, as the operator with a 50%-51% stake in both fields, plans to boost output to ~100,000 BOE/d.

While not an enormous amount of additional production will be added relative to Chevron's massive production base, a successful and timely ramp up is a bullish indicator for Chevron's future endeavors in the region. The slip up at the Big Foot project, which now won't come online until the second half of 2018, put a damper on Chevron's Gulf of Mexico ambitions which is why even marginal bullish updates are a plus.

Hess Corporation's (NYSE:HES) Tubular Bells GoM project, which Chevron owns 42.86% of, reached first-oil in November 2014. So far Hess has done a great job of increasing production to its estimated peak rate of ~50,000 BOE/d (weighted towards crude oil). The Tubular Bells development is targeting recoverable reserves north of 120 million BOE. Hess' success at the Tubular Bells is good news in more ways than one for Chevron, as it paints a bullish outlook for the Stampede endeavor.

The Stampede venture is also operated by Hess (25% interest), which Chevron is invested in with a 25% stake in the project alongside Statoil (NYSE:STO) and CNOOC (NYSE:CEO), through its purchase of...


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