Billionaire Mellon: Venezuela Oil Recovery Requires 5-10 Years
Written by Emily J. Thompson, Senior Investment Analyst
Source: Benzinga
- Recovery Timeline Expectation: Billionaire investor Jim Mellon stated that Venezuela's oil industry recovery will be a long-term story, requiring at least 5 to 10 years to reach an output of 3 million barrels per day, which, in the context of over 100 million barrels daily global output, will only change things at the margin.
- Heavy Oil Advantage: Mellon noted that Venezuela's heavy crude uniquely positions U.S. refiners to benefit first from any eventual recovery, especially as the U.S. is at peak shale and reducing imports from Canada, which also produces heavy oil.
- Investment Recommendation: Despite the long recovery timeline, Mellon continues to recommend that investors increase their exposure to the oil and gas sector, believing that this area will present potential profit opportunities.
- Political Impact: Following the political shift in Venezuela, American energy giants like Valero Energy Corp. and PBF Energy Inc. saw significant stock gains, with increases of 17.20% and 17.64% respectively over the week, reflecting market optimism about future oil supply.
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Analyst Views on CVX
Wall Street analysts forecast CVX stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CVX is 176.95 USD with a low forecast of 158.00 USD and a high forecast of 206.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
19 Analyst Rating
15 Buy
4 Hold
0 Sell
Strong Buy
Current: 171.190
Low
158.00
Averages
176.95
High
206.00
Current: 171.190
Low
158.00
Averages
176.95
High
206.00
About CVX
Chevron Corporation is an integrated energy company. The Company produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance its business and industry. The Company’s segments include Upstream and Downstream. Upstream operations consist primarily of exploring for, developing, producing and transporting crude oil and natural gas; liquefaction, transportation and regasification associated with LNG; transporting crude oil by major international oil export pipelines; processing, transporting, storage and marketing of natural gas; carbon capture and storage; and a gas-to-liquids plant. Downstream operations consist primarily of the refining of crude oil into petroleum products; marketing crude oil, refined products, and lubricants; manufacturing and marketing of renewable fuels, and transporting of crude oil and refined products by pipeline, marine vessel, motor equipment and rail car.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Chevron's Q4 Earnings Preview Highlights Venezuela Opportunity
- Revenue Expectations Decline: Analysts forecast Chevron's Q4 revenue at $48.57 billion, down from $52.23 billion last year, indicating challenges amid market volatility that could affect investor confidence.
- Earnings Per Share Forecast: Expected EPS is $1.45, lower than last year's $2.06, and while the company has beaten estimates in five of the last ten quarters, this decline may raise market concerns.
- Divergent Analyst Ratings: Morgan Stanley maintains an Overweight rating but lowers the price target to $174, while Jefferies keeps a Buy rating and raises the target to $189, reflecting mixed market sentiment on Chevron's future performance.
- Venezuela Opportunity: Chevron could be one of the biggest beneficiaries of U.S. military actions in Venezuela, with investors keenly watching how the company assesses this market opportunity and its implications for short- and long-term financials.
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Chevron CEO Highlights Improved Investment Climate in Venezuela
- Improved Investment Climate: Chevron CEO Mike Wirth noted that Venezuela has eased state control over the oil industry through reforms to its hydrocarbon law, granting private producers more autonomy, which is expected to attract more investment.
- Production Potential: Chevron could increase its production in Venezuela by up to 50% over the next 18 to 24 months if authorized by the U.S. government, with current production at approximately 250,000 barrels per day through joint ventures with PDVSA.
- Safety Stability: Wirth emphasized that the security situation where Chevron operates is mostly stable, although some areas are less safe; the company has implemented strong safety protocols to ensure uninterrupted operations.
- Strong Market Performance: Chevron's fourth-quarter earnings exceeded expectations, with a projected 12% increase in global production and a 16% increase in the U.S. by 2025, while its stock has risen nearly 14% since the beginning of the year, indicating robust market performance.
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