CA - Chevron: Process Improvement

2024-02-01 11:37:52 ET

Summary

• Chevron is improving its process of selling noncore (and often older) production, which is expected to benefit shareholders more than previous sales.
• The company's strong balance sheet allows it to hold properties until market conditions improve, potentially recouping at least some losses from previous write-offs.
• Chevron's acquisitions and plans for growth make it a strong buy for both growth and income investors.
• The common stock also has some recovery potential.
• EQT received quite a bottom when Chevron sold natural gas properties at the bottom of the market a couple of years back.

Chevron ( CVX ) recently announced the beginning of the sale process of some (or all) of its Duvernay production. This is a big improvement over some of the sales actually executed in the past. In a previous article, I noted that Chevron wrote down some natural gas properties and then turned that paper loss into a big real loss by selling those properties to EQT ( EQT ). Exxon Mobil ( XOM ) on the other hand waited to sell the same type of properties until the recovery was well underway, as it has many times in the past. The current Chevron sale is likely to do a lot better for Chevron shareholders than any bottom-of-the-market sales....

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