What's Next For Chevron? May 11, 2019

What's next for Chevron -- after Anadarko?

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

When you look at the market caps below, remember that OXY agreed to pay upwards of $60 billion for Anadarko, and that $10 billion of that $60 billion was coming from Warren Buffett. Chevron had made a $30-billion bid.

[By the way, the OXY-Anadarko deal is yet to play out.]

Investopedia suggests the following that Chevron could consider:

• Concho Resources: $21 billion
• Parsley Energy: $6 billion
• Pioneer Natural Resources: $25 billion
• Climarex Energy: $7 billion

Not mentioned:

• Apache: $12 billion
• EOG: $55 billion
• CLR: $15 billion 

No one likes the Bakken when it comes to discussing M&A, but to the best of my knowledge, of the three US majors, only Chevron does not participate in the Bakken, unless there is some subsidiary of which I am unaware (which is very, very possible). In the Bakken, Exxon has XTO; and, COP, has BR.

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Frackers Now Showing Free Cash Flow

Link here.

Then there’s ConocoPhillips, which is active in the Eagle Ford, Bakken and Permian Basin. In recent years, COP has been the king of cash flow among the pure oil and gas producers.

In the past ten years, ConocoPhillips has generated positive FCF seven times. They took a hit like most other producers in 2015, but the company responded with significant belt-tightening. The firm slashed its dividend, cut capital spending, and sold a number of assets. The result has been a steady improvement in the company’s cash flow.

In 2017 and 2018, ConocoPhillips generated $7.3 billion and $6.3 billion of FCF, respectively. The number fell in 2018 due to the divestment of assets. To put these numbers in perspective, only one other publicly traded oil and gas producer — Canadian Natural Resources — recorded more than $1 billion of FCF in either of those years.

Among the ten largest oil and gas producers half have pretty consistently generated positive FCF since coming out of the 2014-2015 downturn. Joining ConocoPhillips in this group are EOG Resources, Canadian Natural Resources, Continental Resources, and Apache.

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The Book Page

1775: A Good Year for Revolution, Kevin Phillips, c. 2012

The four colonies that made up the vanguard of the revolution: Massachusetts, Virginia, Connecticut, and South Carolina.

North Carolina deserves special mention.

Connecticut played a particularly important role:

... its chief executive, ardent Patriot Jonathan Trumbull, already in office for six years, served eight more through 1783. The colony was uniquely positioned between the three major hot spots of 1775 -- Boston, New York City, and Lake Champlain -- and was uniquely able to raise and send regiments where needed. Trumbull, who worked closely with George Washington, deserves more attention that he has ever received. 

And this:

The Chesapeake region, centered on the thirteen colonies' largest estuary, had a large Loyalist population and might have been an effective British invasion route. Chapter 17 looks at who made that case and how British planners, literally and figuratively, missed the boat in Chesapeake Bay.

Delmarva: latter-day shorthand for the peninsula shared by portions of Delaware, Maryland, and Virginia.

This:

Three times in 1775 Congress urged the individual colonies, emphasizing those along the Chesapeake, to ship their most salable produce only to buyers committed to paying with utter necessities: munitions, weaponry, medicine, and, salt. Paper money was distinctly less welcome in payment. The foreign sellers having the most gunpowder and arms available -- France and Holland were precisely those anxious for tobacco in return.

Chesapeake: from the Algonquin K'che-sepiack, "the Great Salt Water," although only the lower bay was briny.

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If You Were A Sailboat, Katie Melua