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Chevron Shares 2022 Capital Expenditures; FVE Unchanged

While not the cheapest integrated oil company in our coverage, Chevron continues to present one of the safer options.

Securities In This Article
Chevron Corp
(CVX)

Chevron CVX announced a capital spending program of $15 billion for 2022, 20% higher than 2021, but at the low end of its previous guidance of $15 billion to $17 billion. Spending is primarily directed to the upstream segment with $12.6 billion, including $3 billion in Permian spending, and also $800 million in lower-carbon spending. Our fair value estimate and narrow moat rating are unchanged. Management also increased its annual share repurchase guidance to $3 billion-5 billion from $2 billion-3 billion previously. The new annual amount equates to about 1.4%-2.3% of the current market cap and comes on top of a 4.8% dividend yield. While not the cheapest integrated oil company in our coverage at a 12% discount to our fair value estimate, Chevron continues to present one of the safer options given the strong balance sheet, track record of capital discipline, focus on shareholder returns and oil-leveraged portfolio. Its low-carbon strategy is also more circumspect and focuses on areas where it already has competency or in markets where it already participates.

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About the Author

Allen Good, CFA

Director
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Allen Good, CFA, is a director, Europe, for Morningstar*. Based in Amsterdam, he covers the oil and gas industries as well as manages a team of multi-industry analysts. He is also chair of the Morningstar Research Services Economic Moat Committee, a group of senior members of the equity research team responsible for reviewing all Economic Moat ratings issued by Morningstar. In this role, he is responsible for ensuring consistent application of Morningstar’s Economic Moat methodology across sectors and regions as well as updating and revising the methodology. His specialty is global integrated oils such as Exxon, Chevron and Shell and US independent refiners such as Valero and Marathon Petroleum. He also contributes to developing hydrocarbon price and petroleum product margin forecasts used in valuation models.

Before joining Morningstar in 2008, He performed merger and acquisition advisory work for a middle-market investment bank. Before that, he spent several years at Black & Decker in various operational roles, primarily focused on manufacturing and distribution.

Good holds a bachelor’s degree in business from the University of Tennessee and a master’s degree in business administration from Kenan-Flagler Business School at the University of North Carolina. He also holds the Chartered Financial Analyst® designation.

* Morningstar Holland BV (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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