To Chevron Cash Is King? $CVX $XOM $CHK
The volatility of the commodity markets has created giants out of many oil & gas companies and weakened others. Of course this leaves the vultures circling and making many junior / mid cap stocks targeted for acquisitions.
Chevron Corp (NYSE:$CVX) has amassed a large volume of cash, more than $21 billion, which has left investors wondering whether the organization is bracing for an increase in oil prices or is it planning to acquire another business.
The firm’s cash levels have increased by 60% and while they come nowhere near that of the technology giants like Apple’s (NASDAQ:$AAPL) $117 billion, it is more than enough to add to their property portfolio significantly. From an industry perspective, Exxon Mobil (NYSE:$XOM) is nearly twice as big but has just $17 billion cash. Chevron has less than $2.8 billion in debt maturing before 2015.
The company insists that it is only prudent to have large stockpiles of cash in the current unstable economic environment as it continues to develop projects globally. However, John Watson, Chevron’s CEO has admitted that they are in a position for “acquisitions”.
Some analysts are expecting Chevron to acquire what’s left of Chesapeake Energy (NYSE:$CHK), which is in a real cash/debt bind, but still has a number of premium properties. Chesapeake is down 36% in the past year with no relief in sight. Chevron, up 15.4%, is in an increasingly good position. The collapse of Natural Gas prices in the U.S. is creating this environment. Having underperformed the SPDR S&P 500 ETF (AMEX:$SPY) this year fuels suspicions about its stockpiling cash.
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