How Will Chevron’s Revenue Change If Crude Oil Prices Average $50 Per Barrel Until 2018?

+6.18%
Upside
158
Market
167
Trefis
CVX: Chevron logo
CVX
Chevron

Like most of the oil and gas companies across the globe, Chevron Corporation (NYSE:CVX), the US-based integrated energy company, has suffered a severe blow due to the slump in commodity prices over the last two years. The company’s overall revenue and EBITDA dropped close to 40% in 2015, due to the depressed commodity prices throughout the year.

Based on the current commodity prices, and the market trends, we forecast a gradual recovery in crude oil prices over the next couple of years. We estimate crude oil to rebound to around $70 per barrel by 2018 in our base case. However, since the outlook of commodity markets continues to be uncertain, there is a significant downside potential to the company’s top line as well as profitability. In such a case, where the volatility in the global markets continues due to the Organization of the Petroleum Exporting Countries (OPEC) maintaining its high level of production, or lower global demand for oil, crude oil prices could average at around $50 per barrel until 2018. In that case, we expect Chevron’s 2018 revenue to be roughly 20% lower than our base case estimates. Below, we show how each division would perform in the aforementioned base case and downside case.

CVX-Q&A-2-1

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Have more questions about Chevron (NYSE:CVX)? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Chevron

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