On January 25, 2023, its historic city centre was declared a World Heritage Site and added to the List of World Heritage in Danger by the UNESCO World Heritage Committee in recognition of its influence on cinema, literature, and the arts. As of January 2021 Odesa's population was approximately 1,010,537. The city is also the administrative centre of the Odesa Raion and Odesa Oblast, as well as a multiethnic cultural centre. Odesa (also spelled Odessa) is the third most populous city and municipality in Ukraine and a major seaport and transport hub located in the south-west of the country, on the northwestern shore of the Black Sea. For Chevron, it's all about regimented growth and long-term success - which is a rare find in an industry that has historically suffered from boom-and-bust performance which can strain investors.2023 (18th extraordinary World Heritage Committee session) Ramping up production puts those goals in jeopardy. What's more, Chevron has set environmental, social, and governance (ESG) goals - meaning it needs to gradually reduce emissions over time. Chevron is one of the few oil and gas companies that is a Dividend Aristocrat, having paid and raised its dividend for 35 consecutive years.īoosting oil and gas production could lead to even greater outsized returns in the short term but could leave the company overexpanded when the cycle shifts. It starts with financial health, which limits downside risk, keeps spending in check, and leads to high FCF generation, which supports its stable and growing dividend. The investment thesis for Chevron is centered around quality, reliability, and passive income over the long term. The buybacks weren't just a bad investment - they also depleted cash that could have come in clutch today. That strategy has backfired, as many tech equity valuations are now much lower. Over the last couple of years, many tech companies overdid the buybacks when their equity valuations were high. Put another way, Chevron doesn't want to crank up the buybacks when its stock price is at an all-time high or go out and make acquisitions when equity values are higher unless it uses its equity to do so. It also prefers to use equity to make acquisitions at the top of a cycle. On the Q3 2022 earnings call, Chevron CFO Pierre Breber said that Chevron could easily repurchase more stock or go out and buy companies with cash, but it would rather follow a buyback program that it can deliver on no matter the market cycle. Just as Chevron is opportunistic during downturns, it also doesn't get ahead of itself during upcycles. Chevron executed this advantage with its acquisition of Noble Energy in 2020 at a time when the industry was brought to its knees. A strong balance sheet allows Chevron to be in a relatively superior position than the rest of the industry in a downturn. Its balance sheet is arguably in the best shape in company history. And while that gamble is paying off now for many companies, it inflicts catastrophic harm during a downturn, as we saw with the COVID-19-induced collapse of producers that were either forced to sell assets, get acquired by a larger company, or put their balance sheets in a precarious position.Ĭhevron's strategy is simple and effective no matter the market cycle. In a cyclical industry like oil and gas, it's easy for a company to take on a ton of debt, get its leverage ratios high, and then make outsized returns during a boom. In June, Chevron announced plans to reach 1 million BOE/D out of the Permian by 2025. In the Permian alone, production averaged 708,000 BOE/D in Q3, which was about 23% of overall production. In fact, its worldwide second-quarter 2022 net oil and gas production was 3.027 million barrels of oil equivalent per day (BOE/D), which was only slightly less than its 3.034 million BOE/D from Q3 2021. The result has been little change in overall production. This year, Chevron has also been selling off less attractive assets (the Eagle Ford shale, for example) and letting contracts expire in Thailand and Indonesia while boosting production in the Permian Basin. In fact, its long-term goal has been to grow production at a compound annual growth rate of just 3%. Instead, Chevron is using this time to keep its overall production level steady. But it doesn't want to do that during a bullish period in the oil and gas cycle. Chevron could be using its FCF to boost production or even acquire companies.
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