One Reason Chevron (CVX) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Chevron Corp. (CVX) are down 1.28% to $110.84 on data that shows global oil and gas exploration projects worth more than $150 billion are likely to be put on hold next year as plunging oil prices render them uneconomic, potentially curbing supplies by the end of the decade, Reuters reports.

Next year, companies will make final investment decisions (FIDs) on a total of 800 oil and gas projects worth $500 billion and totaling nearly 60 billion barrels of oil equivalent, according to data from Norwegian consultancy Rystad Energy, Reuters said.

Chevron's North Sea Rosebank project is among those with a questionable future, which could be pushed late into 2015 as the company assesses its economics, analysts said.

"This project was not deemed economic at $100 a barrel, so at current levels it is clearly a no-go," Raymond James analyst Bertrand Hodée said. He estimates a development cost of $10 billion for Rosebank, with potential reserves of 300 million barrels, meaning the Chevron would only recoup $33 a barrel, Reuters added.

Separately, TheStreet Ratings team rates CHEVRON CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHEVRON CORP (CVX) a HOLD. The primary factors that have impacted our rating are mixed--some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 13.0% when compared to the same quarter one year prior, going from $4,950.00 million to $5,593.00 million.
  • CVX's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has decreased to $8,680.00 million or 15.85% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHEVRON CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: CVX Ratings Report

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