U.S. energy behemoth Chevron Corporation (CVX) is almost through with repair work at its Richmond, California, refinery crude unit, according to people familiar with the situation. The integrated major could bring the facility online as early as February, but for regulatory hurdles.
Chevron suspended operation at its No. 4 Crude Unit of its Richmond refinery subsequent to the outbreak of a massive fire on August 6, 2012. The devastating fire with thick smoke blowing from the unit sent more than 15,000 people to emergency rooms, while some 200 people sought medical help due to respiratory problems. The 240,000 barrel a day unit, which accounts for one-eighth of the total refinery capacity of California State, has been operating at 50% capacity since the date of the accident.
San Ramon, California-based Chevron is one of the largest publicly traded oil and gas companies in the world based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses. The company divides its operations into three main segments: Exploration and Production; Manufacturing, Products, and Transportation; and Other Businesses.
Chevron shares currently retain a Zacks #3 Rank, which translates into a short-term 'Hold' rating. We are also maintaining our long-term 'Neutral' recommendation on the stock.
Chevron’s current oil and gas development project pipeline is among the best in the industry, boasting large and multi-year projects. Additionally, the second-largest U.S. oil company by market value after ExxonMobil Corporation (XOM) possesses one of the healthiest balance sheets among its peers, which helps it to capitalize on strategic investment opportunities.
However, due to its integrated nature, Chevron is particularly susceptible to the downside risk from any weakness in the global economy. We are also concerned about the company’s high level of capital spending, which may result in reduced returns going forward. Considering these factors, we see the stock performing in line with the broader market.
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