Shale Looks Up, Not Down
The oil price war-pandemic one-two punch has bankrupted a chunk of American shale. Russian and Saudi Arabian companies intend to absorb the vacant market share on state orders, but battle-scarred stateside survivors like Chevron and Exxon are interested, too.
Chevron has committed five-billion-dollars in cash to completing a 13-billion-dollar (including debt) strategic acquisition of Noble Energy, an oil and gas producer. Chevron has historically been good at acquisitions, and this one will help it snatch the patch even more.
The Invstr community is getting back on side with Chevron and shale. This stock is being bought with 94% positive sentiment, and to think, smart people thought negative Brent Crude futures would still be a thing in July and August. The turnaround has been impressive!
Warren Buffett likes to say “the cure for low oil prices is low oil prices.” Chevron will bounce back over time with those, and as other commodities come back. The Noble acquisition will add another tailwind, its aim to make land grab on the Permian Basin, a Mid-Western oil field.
The Permian Basin operations will add 18% to Chevron’s oil and gas reserves, no small sum for such a gargantuan company already, and around $300 million is expected in cost savings. If you’re wanting to get back on oil, this stock is candidate.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
