BP Could Be Up for Grabs, but Who Can Buy the British Oil Behemoth?

This article was originally published by TheStreet on November 14, 2014

By Sarfaraz A. Khan. Research Asst. Omer E. 

NEW YORK (TheStreet) -- As mergers and acquisitions go, the energy industry has seen some of the biggest, from the $80 billion merger between Exxon and Mobil in 1998 to the $15.1 billion takeover of Canada's Nexen by China's CNOOC (CEO) in 2012. With the recent double-digit drop in crude prices, another acquisition could be on the horizon, this time, of European oil giant BP (BP) .

Chevron Refining Unit Saves It From the Oil Price Monster, for Now

This article was originally published by TheStreet on November 8, 2014

By Sarfaraz A. Khan

NEW YORK (TheStreet) -- The refining business of the oil behemoth Chevron (CVX) has turned out to be a promising hedge in a period of deteriorating oil prices, which was evident in its latest quarterly results.

But that may not continue if oil prices go back up or if the lower prices remain for a prolonged period of time.

Chevron, Schlumberger the Early-Bird Winners of Mexico’s Oil Reforms

This article was first published by TheStreet on August 30, 2014

By Sarfaraz A. Khan

Thanks to landmark oil industry reforms, Mexico is gearing up to explore its undeveloped deepwater oil reserves, which could hold roughly twice as much oil as the nation's existing proven reserves.

This could open doors to new business opportunities for Chevron (CVX_) and Schlumberger (SLB_) which could become the earliest and the biggest beneficiaries of the oil reforms.

Since 1938, Mexico's oil and gas reserves have been off-limits to foreign companies. However, earlier this month Mexico's President Enrique Pena Nieto signed into law changes that end the 75-year-old monopoly of the government-owned energy behemoth Pemex on the country's enormous 13.5 billion barrels of oil reserves while opening up the nation's energy sector to foreign investors.

Chevron’s Output Is Deteriorating -- So Should You Be Spooked?

This article was originally published by TheStreet, and also appeared on Yahoo! Finance, on August 5, 2014. 

By Sarfaraz A. Khan 

NEW YORK (TheStreet) -- Chevron (CVX_) reported a drop in production in its latest quarterly results on Friday, as the company's shares dropped by more than 1% and still haven't fully recovered. (As of 1 p.m. Tuesday, shares were trading at $125.83.)

This could be a buying opportunity for long-term investors who consider the six major projects that could revive Chevron's flagging production growth within the next three years.

In terms of price-to-earnings ratio, a metric which is commonly used to measure valuation, with the latest stock price drop Chevron has now become the cheapest vertically integrated oil super-major, as compared to rivals ExxonMobil (XOM_), Royal Dutch Shell (RDS.A_)  (RDS.B_),  BP (BP_)  and  Total (TOT_).

Should Investors Be Worried About Chevron’s Profit Warning?

This article was originally published by GuruFocus on April 10, 2014

By Sarfaraz A. Khan. Research assistant: Gohar Yousuf

Yesterday, America’s second biggest oil and gas company Chevron (CVX) issued a profit warning for the first quarter of the current fiscal year. Does this mean that the investors should start panicking?

Chevron Tries to Build Value as It Cuts Costs

This article was originally published by TheStreet on April 1, 2014

By Sarfaraz A. Khan. Research assistant: Gohar Yousuf

NEW YORK (TheStreet) -- Chevron (CVX_) has cut its 2017 production forecast by 6% to 3.1 million barrels per day. You'd think that means bad things ahead for the second-largest U.S. oil company.

However, the company thinks it can boost its value to shareholders through a combination of lowering  capital expenditures by 5% and higher production through five major projects that could come online within the next two years.

Shell Way Ahead of the Crowd

This article was originally published by TheStreet.

NEW YORK (TheStreet) -- From Exxon Mobil's  (XOM_) venture into the semi-autonomous region of Iraq to Chevron's  (CVX_) ambitious Gorgon liquified natural gas project in Australia, the leading global oil and gas companies are known for taking big risks by betting on projects that are far too challenging for mid-cap energy companies.

One such company -- European oil giant Royal Dutch Shell  (RDS.A_) -- is leading the industry in the development of floating liquefied natural gas, or FLNG, technology.

Earlier this month, Shell moved one step closer to its FLNG ambitions when it moved the enormous 1,600-foot hull of its FLNG vessel, called Prelude, out of the dry dock. Through this facility, which came with a price tag of around $11.7 billion, Shell will be able to tap into offshore projects that are otherwise too costly to develop.

Shell plans to use this massive vessel to tap into the growing demand for LNG from Asia. Shell's FLNG vessel is nearing completion while its competitors are still in the early stages of development. In terms of FLNG, Shell is way ahead of the crowd.

Natural gas, unlike coal, is the cleaner alternative for power generation. To ship this gas, companies must chill the gas to hundreds of degrees below zero. This process turns the gas into liquid (called LNG) as its volume shrinks by 600 times, which makes it easier to ship the fuel to far-off places. Traditionally, this is done on land through conventional LNG plants.

Through its FLNG project, however, Shell aims to take both production and processing operations to deep sea.

A FLNG vessel can be a cost-effective alternative to .. read full article at TheStreet

3 Undervalued Oil Majors Betting Big on Gulf of Mexico

By Sarfaraz A. Khan and Gohar Yousuf

Gulf of Mexico is one of the primary resources of energy for the U.S. Its offshore oil production represents a little less than a quarter of the U.S. crude oil production while its offshore natural gas production accounts for 7% of the total U.S. dry production. Its coast is home to 40% to America’s total refining capacity and 30% of America’s natural gas processing plant capacity. In short, its importance to America’s enormous energy industry cannot be overstated.

According to energy consultants Wood Mackenzie, the daily production from the deepest parts of Gulf, in water depths of more than 1,300 feet, will be around 1.5 million barrels of oil. This would represent more than a 15% increase from the projected production of 2013. Moreover, amid the increasing E&P activity, some of which is discussed below, by 2020, average production at the Gulf of Mexico is expected to cross ... read full article at GuruFocus

Why Investors Should Not Be Worried About Chevron's Massive CapEx

By Sarfaraz A. Khan and Gohar Yousuf

One of the world’s leading integrated energy companies, Chevron (CVX) has been spending enormous amounts of cash on some of its biggest projects to ramp up its production of oil and gas. As a result, the company has not returned as much cash to shareholders, through dividends and buybacks, as they would have liked. Following the global financial crisis, investors have favored companies with attractive dividends and buyback programs, as opposed to companies like Chevron, who invest in their long term future. This is one of the reasons why this oil giant’s shares have remained under pressure, despite having attractive long term growth prospects.

Going Over the Budget
In its most recent quarterly results, Chevron reported a 25.6% year-over-year increase in capital and exploration expenses to $10.59 billion. A significant portion of this increase was attributed to the company’s operations in the international markets, where its spending grew by 28% to $7.84 billion. In the U.S, Chevron spent around $2.7 billion, showing an increase of 18% from the same quarter last year. Overall, in the first nine months of the current year, Chevron has... read full article at GuruFocus

Why Is Chevron Still Betting On Eastern Europe's Shale Dream?

From Seeking Alpha

Eastern Europe is eyeing energy independence through a shale gas revolution. The region has traditionally relied on Russia for its energy needs. Poland is the largest European Union economy in Eastern Europe which has recently shown an impressive 0.8% quarterly economic growth indicating an economic upswing. Poland was betting its energy independence on its massive shale gas reserves. But things turned sour when exploration firms found less gas and estimates were drastically cut as energy firms started packing their bags to leave the country. But the U.S oil major Chevron Corp (CVX) is still betting on Poland's unconventional resources.

In this article, I will discuss the initial signs of improvement shown by the Polish economy, its shale gas ambitions and the dominant role that Chevron is now playing in the country. Although the article is mostly about Chevron and Poland's shale gas ambitions, I would also like to highlight the recent rally of the two Polish ETFs.

Economic Revival

According to Bloomberg's survey, Poland's recent GDP growth number was above market's growth expectations of 0.5% to 0.7%. Warsaw-listed BRE Bank SA has identified that ... Read More

Why Oil Majors Are Betting Billions on This Unattractive Market

From The Motley Fool

By Sarfaraz A. Khan
Research Assistant: G. Yousuf

Peter Voser, the outgoing CEO of Europe’s leading energy major, Royal Dutch Shell (NYSE:RDS-A), has announced his company’s plans to invest $30 billion in Australia over the next five years. Voser was speaking at the Australian Petroleum Production and Exploration Association conference. However, like other firms operating in the country, Shell is also concerned about rising inflation and increasing costs. In such an environment, the chief executive believes that the government must provide “the right regulatory and tax policies to drive innovation and investment.” Otherwise, Australia could lose about $100 billion in potential investment to other, more business-friendly regions. 

This Oil Major Is Eyeing The World's Second Largest Shale-Oil Basin

From Seeking Alpha

John Watson, the chief executive of one of the world's leading energy firms Chevron (NYSE:CVX) has recently said, while speaking at the Center for Strategic and International Studies in Washington, that while there are enormous resources of shale oil and gas available throughout the world, it will take considerable time, even decades, before they are developed.

The US Energy Information Administration's (EIA) recent estimates have shown that globally there are 345 billion barrels of oil and 7,299 trillion cubic feet of gas, technically recoverable unproven shale resources. While we have abundant information about the total reserves in the U.S and Western Canada that can be exploited using existing technology, very little is known about South America or Eastern Europe . . . . Read more