Chevron Case Analysis

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Chevron Corporation Like all the oil and gas companies, Chevron Corporation has also been directly affected by the collapse of crude oil prices that has continued for more than last one year. Crude oil prices have declined more than 50 % from where it was a year ago. Chevron reported revenue of $ 37 billion in the most recent quarter which was 34 % lower than last year’s $ 56 billion. The company’s net income was $ 571 million in the second quarter of 2015 i.e. 90 % down compared with the income of $ 5.7 billion in second quarter of last year. After adjustments the earnings were $ 1.8 billion. Cash flow from operations was $ 7.2 billion. The company sold assets worth $ 1.80 billion in the last quarter. The company’s upstream operations were affected more by the decline in crude oil prices since it resulted in reduced revenues and impairments worth $ 1.96 billion triggered by a downward revision in the company’s longer-term crude oil price outlook. The company reported a loss of $ 2.2 billion from its upstream business. Production in the upstream segment increased 2 % from 2.55 million barrels per day to 2.60 million barrels per day in the second quarter. This increase in production was the result of increased production capacity in the facilities in US, Bangladesh and Argentina…show more content…
The company is facing such cash crunch that it has used some of its proceeds from asset sales to cover these expenses. The reason is that Chevron is continued to develop some of its mega projects even as oil prices have continued to decline since more than last one year. Chevron’s logic behind this is simple. It is developing these projects for LNG production which would provide it some cushion in the future as oil prices remain low. The company is diversifying its portfolio. It is increasing the weightage of LNG now. This will help the company in the long

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