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Finance & Investment Club

Finance & Investment Club. Team: Value Seekers. Charles Chen, Christina Lam, Bo Joseph Peng, Jonathan Yin, John Pelissier. Corporate Overview. Chevron is one of the largest integrated energy companies in the world Over 53,000 employees, and conducts business in 180 countries

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Finance & Investment Club

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  1. Finance & Investment Club Team: Value Seekers Charles Chen, Christina Lam, Bo Joseph Peng, Jonathan Yin, John Pelissier

  2. Corporate Overview • Chevron is one of the largest integrated energy companies in the world • Over 53,000 employees, and conducts business in 180 countries • Main Competitors: • Exxon Mobile, BP • Upstream and Downstream operations • Upstream: Exploration and Production • Downstream: Refining, Marketing and Transportation • Mining, Global Power Generation, Research and Tech, Chevron Energy Solutions

  3. Major Operations in: • United States • Russia • Kazakhstan • Saudi Arabia • Brazil

  4. Economic Outlook: US Dollar to Yen Dollar to Yuan Dollar to Euro

  5. Economic Outlook: US • Devaluation of the dollar • Inelastic demand of crude oil • World’s largest GDP

  6. Economic Outlook: Russia • Growing Economy • Political Issues • Energy Sector has slowed

  7. Economic Outlook: Kazakhstan • Political issues • High inflation • Growing trade deficit • Weak currency

  8. Economic Outlook: Saudi Arabia Riyal to Euro Riyal to Dollar

  9. Economic Outlook: Saudi Arabia • Saudi Arabia’s economy revolves around oil and gas • Chevron is a leader in the country • OPEC’s current policies

  10. Economic Outlook: Brazil • Credit Crunch • Economy has looked strong • Heavy demand of oil

  11. Industry Analysis: Versus Major Indices Dow 1 Year 3 Years S&P 500

  12. Company Performance: 1 Year 5 Years

  13. Net Income Comparisons

  14. R&D Spending Comparisons

  15. Operating Expenses Comparisons

  16. Management Outlook for 2007 • Recently, the price of crude oil has increased dramatically. The price should continue to increase in the near future, which will lead to increase in earnings for 2007. A global increase in demand for oil may also lead to an increase in future earnings. However, due to the growing operating costs, the inflated earnings will most likely balance out. Therefore in 2007, earnings will increase, but not by much. • Chevron’s future earnings are greatly affected by the downstream and upstream business segments.

  17. Key Comparisons

  18. Recommendation: • Moderate Buy • While Chevron has looked strong in their finances, there are concerns about the economies of the countries that the firm conducts business in. With the instability of crude oil prices, there might be some inflated values in predicted earnings. However, the firm has been growing tremendously these past few years. Chevron’s heavy investment in R&D spending will allow it to continue to gain ground on their competitors. This is an investment that is very low risk, and it should provide at least average returns in the short to medium term.

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