CVX Stock – Chevron High CAPEX Will Pay Off
Besting XOM in the return department over the last three years, Chevron stock could have plenty of upside into 2014. Like XOM, Chevron is spending some big bucks to increase production. Overall, CVX will spend a massive $36 billion in total — with nearly $33 billion of that going to finding new sources of oil and natural gas throughout 2014.
Ultimately, CVX will use those billions in projects ranging from developments in Australia and Nigeria to the deepwater of the Gulf of Mexico. In fact, potential Chevron stock investors should know that the company currently has around 50 projects in its pipeline. The key for those projects is that most are tied to higher-priced oil and not domestic natural gas production. Even better, the bulk are international projects tied to the higher-priced Brent benchmark.
That means that, despite the higher CAPEX spending, CVX should be able to command a higher price per barrel for what it produces … unlike XOM which, through its purchase of XTO, is still very much a domestic natural gas producer.
However, even on the natural gas front, CVX stock is making hay. That’s because 2014 will finally see its massive Gorgon LNG project in Australia begin to produce gas for shipment. The facility should start up in late 2014, with the first LNG cargo being delivered in the first quarter 2015. Global prices for LNG and natural gas are higher than here at home, meaning CVX should be still make more per Bcf of natural gas than XOM.