Chevron ( CVX ) is one of the largest energy companies in the world and competes with other established oil producers like Exxon Mobil (NYSE:XOM), ConocoPhillips ( COP ), BP ( BP ) and Anadarko ( APC ). While it has extensive operations of its own throughout the world, it also has equity investments in several affiliates globally from which it earns some income. Below we take a brief look at Chevron's equity investments and their value to company's stock.
Chevron's Equity Investments, More Focused in Crude Oil
Chevron has several equity affiliates spread globally from which its gets its share of income. This includes production of both crude oil as well as natural gas. From 2010 figures, it seems that these equity investments are more focused in crude oil production. While Chevron's consolidated crude oil production amounted to 1,617 thousand barrels per day in 2010, its share of equity affiliate production stood at 306 thousand barrels per day.
In terms of natural gas production, Chevron's consolidated operations produced 4,677 millions of cubic feet of natural gas per day in 2010. Comparatively, its share of equity affiliate production was just 363 million of cubic feet per day. Clearly Chevron is more self reliant when it comes to natural gas production.
Equity Affiliates Constitute 11% of Chevron's Stock Value
We estimate that income from equity affiliates constitutes about 11% of Chevron's stock value, which we peg at $104 . This equity income has fluctuated in the past, more so in line with oil prices. Going forward we expect it to grow and reach close to $7.5 billion by end of our forecast period.
Our price estimate for Chevron's stock currently stands at $104, roughly in line with market price.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.