Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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New Discoveries Mean this Company Could Meet 15% of
U.S. Daily Oil Demand |
Published:
July 7, 2008Well known to most investors,
Chevron (NYSE: CVX, $98.63) is the second-largest U.S.-based integrated oil company.
The firm derived just under 80% of its net income in 2007 from
the production of oil and natural gas. The rest of its profits
came from refining and marketing refined products.
Catalysts: Among the U.S. integrated oil
companies, Chevron has the strongest production growth potential
thanks to the planned start-up of several new projects in the
coming three years.
For example, CVX plans to start production from its Agbami
deepwater oil production project in Nigeria by the end of 2008.
CVX has a 68% stake in the field, and its share of production
could reach 150,000 to 200,000 barrels of oil per day from the
field over the next two years.
CVX also has plans to begin production from two large deepwater
projects in the Gulf of Mexico: Tahiti and Blind Faith. The
firm's share of production will likely be more than 100,000
barrels per day from these fields combined.
And these are just three of Chevron's most advanced projects --
the company has several more projects planned in the Gulf and
internationally. All told, management believes that the firm can
produce around 3 million barrels of oil equivalent per day in
2010, up from about 2.6 million today.
In addition, CVX has significant exploration upside. The company
plans further exploration work on two major Gulf of Mexico
deepwater fields -- St. Malo and Jack -- for 2008. If those
wells pan out, the company would likely boost reserve and
production estimates for these fields.
Finally, my staff and I also like Chevron's burgeoning liquefied
natural gas business.
Natural gas is comprised primarily of methane, a colorless
hydrocarbon gas. Or at least it's a gas at room temperature: When cooled to -160 degrees Celsius (-260 degrees Fahrenheit),
natural gas liquefies. LNG can be loaded onto tanker ships and
shipped anywhere in the world, just like crude.
The U.S., EU, and Asia are projected to become far more
dependant on LNG imports in coming years. CVX has promising gas
developments in markets like Nigeria and Australia that it plans
to produce as LNG. Thus, the firm looks like a promising play on
growth in demand for LNG.
Competitive Advantages: Chevron has plenty of
competition in the oil and gas business. Nonetheless, due to its
size and financial strength, CVX is one of only a handful of
firms with the scale to pursue multi-billion dollar deepwater
and international oil and gas development projects. And it's not
just size; CVX has completed several large-scale projects and
has significant experience and know-how when it comes to
completing such deals.
In addition, CVX has a long history of operating in key oil and
gas-producing regions of the world. The company has existing
relationships with many foreign governments and NOCs that give
it a leg up on winning a stake in major new projects.
Finally, on the refining front, no new refining facilities have
been built in the U.S. in more than 30 years. Getting planning
permission for a new refinery would be difficult because of local
opposition and environmental issues. Therefore, companies with
an attractive base of refining capacity are unlikely to see
competition from new facilities.
CVX owns some attractive refining assets. Specifically, refining
margins on the West Coast tend to be higher than in the east due
to a shortage of refining capacity and the lack of European
gasoline imports. CVX owns a large base of refineries in the
region and can therefore take advantage of these fat margins.
Valuation and Outlook: Shares of Chevron have
performed well in recent years, but continue to trade at a
discount to many of its integrated oil peers. The stock trades
at about 7.9 times next year's earnings estimates, compared with
8.7 for ExxonMobil (NYSE: XOM).
And CVX's long-term projected growth rate stands at about +12.7%
-- with a price-to-earnings-growth rate of just 0.62.
Chevron should see its production pick up over the next few
quarters as it opens new projects in the Gulf of Mexico, North
Africa and Asia. In addition, CVX has several promising
exploration projects underway; the company is likely to announce
updated reserve and development information on these prospective
plays, another potential upside catalyst.
CVX looks like a good value at current levels. I
consider the stock a "Buy" under $100 per share.
-- Paul Tracy
Editor
StreetAuthority
Market Advisor
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opportunities each month, plus access to five model
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