Those who say that Chevron is in a downfall, I would like to hear their arguments and opinions about the main reasons that led to that downfall.
19 replies (most recent on top)
The problem of thinking we can grow reserves by acquisition (that is problem for the current workforce) is that mergers add new folks to the ranks, many of whom already know the acquired assets better than current Chevron staff. It is conceviable Chevron can stay the same size through mergers and acquisitions, but the workforce will effectively continue to be reduced. Let the hunger games begin, and may the odds always be in your favor.
Chevron is playing the game well. Placate the system by having incompetent management diversity hires and don’t spend any money on actual projects. The competition follows with diversity hires but spends on doomed projects, not realising the incompetence of their management. They eventually go bankrupt. Chevron buys their assets at a deep discount and the Chevron stock price goes up. Brilliant!
@6ejp "money distributed to renewables and employees" lol, that's precious !
Bless your heart!
@1svg: "The death of Chevron will not happen overnight but by the end of this decade... The last rats ("employees") off the boat will find the few remaining petrol tech and field operations jobs oversubscribed and offering minimal compensation." Your crystal ball is quite accurate. Petrotechs complaining about poor raises don't realize this is the plan to gradually lower compensation by less-than-inflation raises. Let's face it, if we aren't looking for any new oil, there's no reason for those high salaries, and by the end of the decade there will be no reason for most of the people, either. Couple that with minimal hiring and no movement to other companies, and Chevron petrotechs are now caught in a game of musical chairs, with two chairs being removed each layoff cycle. (Meanwhile, all those 2020 EOI Boomers are sipping margaritas by the poolside, still collecting MW's balloon dividend...)
And free ice cream for everyone too!
Biggest reason for the downfall is the dividend. Should be cut in half and have that money distributed to renewables and employees
If you could compare a snapshot of Chevron in 2013 with today, you'd be appalled at the decline in less than a decade. Much due to the industry environment, but much self-inflicted.
All to be rescued by the CVX-XOM merger. Don’t sweat it.
Juice the stock price and acquire other companies to build reserves. Next oil bust, I would expect an enormous amount of merger activity. When the dust settles, there will probably be 3 players left in the Permian: CVX, XTO, and COP. I'm betting Buffet parses out OXY's assets or arranges for a merger (something Icahn wasn't able to pull-off). Similar situations will play-out in other development areas (GOM, Brazil, Nigeria, Angola, etc.).
@1svg, I've been saying much the same thing for years. It's so obvious. No money going into exploration, the only organic growth engine of a healthy oil company. Cronies and diversity placements in what used to be important positions. Chevron, sensing the future, puts penny-pincher and risk-averse MW in command of the ship, after he proved his worth (no pun intended) by decimating downstream. He immediately starts $$$ stock buy-backs and shoring up the dividend rather than growing the company. 10-15 year exit strategy? Sure looks like one...
Corporate executives are fleecing their companies for personal profit. They juice the stock with buy backs and dividends because their performance evaluation is pegged to the ticker price and their compensation is largely stock itself. Execs choose to forego investing in assets, reserves, and capital investment that would make Chevron more healthy in the long-haul. This isn’t a Chevron-only problem, but we can see it happening right under our noses.
Ever company is a finite company with a limited amount of years left until dying out.
Chevron is a finite company witha limited amount of years left until dying out.
"Has anyone told Warren Buffett" ... Buffett's no dummy. He knows there are lots of moneys to be made in the final days of oil . He can double or triple his investment, profiting from the industry asset sell-offs and positioning himself well during transformation instabilities (like the current oil spike). The standing cows should pay well enough that it will be easy for him to walk away from the embers. That said, don't expect him to advocate spending much money to put new logs on the fire.
Upper management has Chevron in close-out mode: Take the cash and run. Minimal investment in expensive long-term (high-value) developments, a focus on economically milking the standing cows, and using current short-term profits for stock buybacks to boost invester returns (including the deferred compensation packages of upper management itself). The result will be the natural withering of GOM, West Texas, and legacy base business assets as reserves continue to decline. CTC will be decimated first, as forward-looking subsurface development ideas will be of little interest to management focus on short-term profits. Some longer-term liquified natural gas assets (e.g., ABU) will be spun off into separate companies, as well as non-operating partnerships with Venezuela, Iran, Russia, etc. if they ever develop. Likewise, successful alternative energies and other blue sky initiatives in development today will be spun off to fund the dividend short term (and so that they have the potential to grow unencumbered by the sinking conventional oil assets). The death of Chevron will not happen overnight but by the end of this decade future trends will have become obvious and all but the liquidation investors will be abandoning ship. The last rats ("employees") off the boat will find the few remaining petrol tech and field operations jobs oversubscribed and offering minimal compensation.
Simple. Upper mgmt is not interested in having people with the right technical or business skills in critical positions. That was made clear by seeing many people being put in positions that don't have the skills or knowledge to perform. They're more worried about promoting the optics of D&I. At some point, this will catch up to them
Has anyone told Warren Buffett yet? Someone should probably tell him.
No one told Warren Buffett about Chevrons downfall. Maybe someone should tell him.
Curse of the Rockefellers.
Times up, according to the Pequot Calendar.