There is some talk that the reserve is too big based on current import requirements and we should draw it down. I think we should build it up to protect our shale industry and jobs.
I agree for the near term the dividend is safe. I think if oil prices remain low for the next couple of years then the current dividend is not safe. The problem is that they will not be making coverage for at least the next couple of quarters. They will be essentially paying out of savings. If you invest for dividends like I do, I would say you are better off waiting. Best case scenario is that the dividend is not cut but I believe it will not be raised for several quarters. I see no reason to rush into CVX when there are many dividend payers that are going to raise their dividend this year. A 4% yield is not enough to compensate me for my risks when I can get SO that pays a higher yield and shows positive earnings growth and will make a dividend increase within the next quarter. You can't say that about CVX.
The total capacity of the reserve it 727 million barrels of crude. Last I checked we were around 695 after the Obama administration sold off 5 million barrels. There was a proposal a few days ago to buy back that 5 million barrels. So right now we could add 32 million barrels to the reserve. Unknown to a lot of folks there is actually a heating oil reserve and a gasoline reserve.
Generally, it is best to wait till the stock washes out after the IPO before getting in. Saw this with FB, saw it with MBLY, and also LOCO, all stocks I bought after they washed out. FB I sold after it doubled but probably got out too soon. The other two I own. Usually happens 2-3 months after the IPO. MBLY took a bit longer but certainly now is the time you should own it for awhile.
The media is hyper bearish on oil, but the public is not bearish enough on oil stocks, people are jumping in way too early. I dumped my oil stocks at the beginning of October last year. Doubt I will be buying any before October this year. I said at the beginning of this year and I will say it again. CVX is a 60-70 stock. Over 100 is a very good sell price for CVX.
I don't see them cutting the dividend although they probably won't make coverage this quarter or next. They will probably tighten spending and dig into their pockets a bit. On the other hand, a dividend raise probably isn't going to happen. It would be irresponsible in the face of falling earning. I just don't see a lot of reason to rush out and buy a company with trading at a 27 PE and a 4 percent yield with very little prospects for a raise over the next couple of years when I could buy SO for a nearly 5 percent divvy and the prospect of raises and a much lower PE.
It really is just a knee jerk reaction to the sharp move up in rates. The theory goes consumers won't be buying consumer durable's as rates rise.
GE is providing greater access to "big shareholder" but this is at the expense of individual shareholders who now have less of a voice.
I have seen outstanding analysis and I have seen horrible analysis by the writers at SA. There doesn't seem to be a lot of screening by SA of the writers or the articles. The fate of CVX and a lot of oil stocks depends on how oil does. My opinion is that oil has gone up for all the wrong reasons and it will be back below 50 a barrel soon. Still way to much supply and inventories are growing not shrinking. Would like to see oil bounce off the 45-46 level before I am convinced oil has seen the bottom. Seems to me that a stock that is trading at 28x forward earnings is a bit pricey to me.
Really don't understand what was holding this stock up. The revisions for 2015 keep getting worse and worse. Now that earnings are around the corner, traders seem to be bailing big. Sell through post earnings is going to be heavy. I have been saying for months on this board, wait tell after earnings to buy. Like you say forward PE of 21 is way high for a company with negative growth forecast. I agree, see this dipping between 70-80 soon.
I have been saying over the last few weeks, folks should be braced for a zero dividend. If they have withheld some cash then great, they are going to need it to pay their expenses. So we are nearly a month into the actual quarter and we got oil down below 50. Doubt we will average 79 this quarter.
There is no good news in the technical. The stock has been making a series of lower highs and lower lows since July. It has managed to hold above 100 for the time being
I think the supply overhang is something that has been baked into the stock price for awhile. I know I was reluctant to buy more until the lockup period was over and we got the supply problem over with. Now that the cats out of the bag and got the bad news out of the way, I think people are just relieved. It is the old sell on rumor buy on the news situation.
Bottom line is that insiders control the company based on their share count alone. Looks like to me 40 million shares are outstanding and the float is just over 100 million. That is a lot of stock to bring directly in the market. It would crush the stock price if the insiders just were allowed to dump their shares on the market when they wanted to. It is actually to your benefit that they are managing it. Get used to it, this is the way that IPO's are done. Usually, it is better to wait until after the lockup periods to buy IPO'd companies.
Earnings may be $10 a share this year but you have to realize that is due to $2.50 in tax credits that are going away so it isn't a true $10 and that jump was mainly due to anticipated drop in fuel costs. 50% growth rate is certainly not sustainable for this company. 8-10% might be but that is dependent on keeping their costs under control. Right now they have a big headwind in the form on a big increase in wages.
Hedging is like purchasing insurance. It is a loss until something happens and you need it. Saying "well they shouldn't have hedged because they lost money" is really rear view window stuff. I don't think anyone guessed a year ago that oil prices would be cut in half from what they were.
I have no position in CVX short or long. IMO, it is the right company but the wrong time to own it. I would buy it if the price were right but there is not enough upside in the stock to warrant taking the downside risk. The stock needs another 20% correction before I would get interested in it. Right now you have a stock that has had a little more then 20% correction with a 40% drop in earnings projections. Something has to give.