The energy sector, specifically oil and gas, has been a less than desirable area for investment lately. This is primarily due to the volatility of oil and gas prices. Yet, I do see great opportunities within this sector, especially for the long term. In the following article, I will hone in on four companies, Chevron (CVX), Exxon Mobil (XOM), BP (BP), and Royal Dutch Shell (RDS.A), which are selling below their 52-week highs and have strong balance sheets.
Chevron is America’s third largest company, and second largest oil and gas company after Exxon Mobil. Chevron is certainly in no position to overtake Exxon anytime soon, as Chevron’s revenues in recent years have usually been about half of Exxon’s. Chevron is doing a lot of things right, but that is not the purpose of this article. Chevron is a defendant in several multi-billion dollar cases, and I am writing today to gauge those cases and assess the risks they pose to Chevron.
Any integrated oil and gas company is going to be in court on a routine basis. But Chevron is also the subject of matters that are far from routine. On the other hand, Chevron is not a typical company. It has operations in six continents, and in the first quarter of 2012, it earned nearly $6.2 billion, for a trailing 12 month total of over $27 billion, or $13.62 per share. It has $20 billion in cash, and a debt level so low it is only 7 percent of capitalization. To continue reading, click here.