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Chevron (CVX), Bunge Joint Venture to Create Renewable Fuel

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Headquartered in San Ramon, CA, oil major Chevron Corporation CVX said that it signed a definitive transaction agreement with diversified agribusinesses operator, Bunge Limited BG, to create a joint venture, which was initially publicized in September 2021. This 50/50 initiative, intended to create renewable feedstocks, will make use of Bunge’s know-how in oilseed processing and farmer relationships and Chevron's experience in fuels manufacturing and marketing.

According to the terms of the deal, St. Louis-based Bunge intends to commit its soybean processing plants based in Destrehan, LA and Cairo, IL to the joint venture. Meanwhile, CVX will contribute about $600 million in cash. By the end of 2024, both the companies expect to double the combined capacity of the facilities from the existing 7,000 tons per day. Also, under the agreement, Bunge will run the facilities and Chevron will have purchase rights for the oil to be used as a renewable feedstock to produce transportation fuels with the lower lifecycle carbon intensity. Furthermore, the joint venture might also search for prospects in other renewable feedstocks along with feedstock pre-treatments.

Chevron’s executive vice president of Downstream & Chemicals, Mark Nelson, said that his company has taken the first step toward creating the capacity to produce 100,000 barrels per day of renewable diesel and sustainable aviation fuel by 2030 by acquiring a predictable supply of renewable feedstocks via the joint venture with Bunge.

Chevron is one of the largest publicly traded oil and gas companies in the world with operations spanning worldwide. The only energy component of the Dow Jones Industrial Average, CVX is fully integrated as it participates in every aspect related to energy, from oil production to refining and marketing. The company generates around $95 billion in annual revenues and produces more than three million barrels per day of oil equivalent. It currently churns out oil and natural gas at a 59/41 ratio. As of the end of 2021, the company had proved reserves of approximately 12.4 billion barrels of oil equivalent.

Bunge Ltd. is an integrated global agribusiness and food company spanning the farm-to-consumer food chain. Bunge processes, produces, moves, distributes and markets food on five continents. Bunge is the world’s leader in oilseed processing and a leading producer and supplier of specialty plant-based oils and fats. It has almost 23,000 dedicated employees working across approximately 300 facilities in more than 40 countries.

Chevron currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks from the energy space that warrant a look include ExxonMobil XOM and Valero Energy VLO, both sporting a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 5.8%. ExxonMobil stock has increased around 33.4% in a year.

The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised upward by about 15.1% over the past 60 days from $5.95 to $6.85 per share.

The Zacks Consensus Estimate for Valero’s 2022 earnings is projected at $7.10 per share, up about 152.7% from the projected year-ago earnings of $2.81.

Valero beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 75.7%. VLO is valued at around $35 billion.


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Bunge Limited (BG) : Free Stock Analysis Report
 
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