Chevron Corporation (NYSE:CVX) reviewed its outstanding 2010 financial results at a recent analyst meeting, and also outlined its large inventory of upstream oil and gas projects and the production growth this will generate over the next five years.

IN PICTURES: 4 Biggest Investor Errors

2010 Results
Chevron reported net income of $19 billion, or $9.48 per diluted share in 2010, with more than 90% of these earnings from the upstream sector. The company's return on capital employed, a key measure of performance for large integrated oil companies, came in at 17% for the year, with the upstream segment returning 23%.

The company also pays a decent dividend and has consistently raised that payout historically, including a 6% increase in early 2010. The stock now has a yield of 2.9%.

Chevron reported net production of 2.76 million barrels of oil equivalent (BOE) per day in 2010, and although this represented production growth of only 2% over 2009, the company is making investments that will increase this growth rate in future years.

2011 Capital Expenditures
Chevron has established a $22.6 billion upstream capital budget for 2011, and expects to produce 2.79 million BOE per day in 2011. The company estimates that the upstream investments it is making during this decade will increase production to 3.3 million BOE per day by 2017. This is 18% higher than 2011, or an approximate compound annual growth rate of close to 3%.

Largest Project
Chevron's largest upstream project under development is the Gorgon project in Australia, which the company operates and owns a 47% interest. The project is located off the northwest coast of Western Australia, and involves developing several offshore natural gas fields and the construction of a Liquefied Natural Gas (LNG) facility.

The facility will have 15 million ton per year capacity and will export most of the LNG to Asia. The project will also include a domestic gas plant to supply Australian markets with natural gas. Chevron expects first production in 2014, and estimates that the total project will cost approximately $37 billion.

Since this project is so expensive, Chevron has taken on several partners, including Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS), which each own 25%. Also, three Asian based companies own small percentages of this project.

Australia is a popular area for the oil and gas industry as it looks to find new supplies of energy. Apache Corporation (NYSE:APA) is active here and drilled 31 wells in 2010. The company has 12 million gross acres in many different parts of the country.

The Bottom Line
Chevron spent a recent analyst day highlighting the company's 2010 operational and financial achievements in 2010. The company also reviewed the major upstream projects that the company has under development in the United States and internationally. (For related reading, also take a look at Unearth Profits In Oil Exploration And Production.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Options & Futures

    Analyzing The 5 Most Liquid Commodity Futures

    Crude oil leads the pack as the most liquid commodity futures market, followed by corn and natural gas.
  2. Term

    What are Non-GAAP Earnings?

    Non-GAAP earnings are a company’s earnings that are not reported according to Generally Accepted Accounting Principles.
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI US 1000

    Find out about the PowerShares FTSE RAFI U.S. 1000 ETF, and explore detailed analysis of the fund that invests in undervalued stocks.
  4. Options & Futures

    Use Options to Hedge Against Iron Ore Downslide

    Using iron ore options is a way to take advantage of a current downslide in iron ore prices, whether for producers or traders.
  5. Stock Analysis

    Fortinet: A Great Play on Cybersecurity

    Discover how a healthy product mix, large-business deal growth and the boom of the cybersecurity industry are all driving Fortinet profits.
  6. Stock Analysis

    2 Catalysts Driving Intrexon to All-Time Highs

    Examine some of the main reasons for Intrexon stock tripling in price between 2014 and 2015, and consider the company's future prospects.
  7. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  8. Savings

    Do Natural Gas Prices Always Follow Oil Trends?

    Prices for oil and natural gas are highly correlated. But investors should be aware of different factors affecting the prices of these commodities.
  9. Charts & Patterns

    Understand How Square Works before the IPO

    Square is reported to have filed for an IPO. For interested investors wondering how the company makes money, Investopedia takes a look at its business.
  10. Technical Indicators

    4 Ways to Find a Penny Stock Worth Millions

    Thinking of trading in risky penny stocks? Use this checklist to find bargains, not scams.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!