02-05-2020, 10:51 AM
(02-05-2020, 08:58 AM)Binary Wrote: Picked up some SPG yesterday at open.
Guys, I'm looking at CVX and XOM, but I've only been losely following them. What is the reason for the big dips? The balance sheets look decent with managable level of debt, but the free cash flow to dividend ratio is not that happy. Is this normal for those two players?
Have you been following oil prices? Your answer mostly lies there. Oil is a big crap shoot in the short to midterm. This is a seasonally low period for oil demand, and now China is in a virus slowdown. OPEC+Russia is threatening to call an emergency meeting. Will they cut production knowing the US will fill the supply gap in a month? Who knows and Russia seems to get that.
You can read up on some mis-steps from XOM and CVX lately. XOM is spending big CAPEX on new oil in Guyana. That might make sense in the end. It doesn't today and their earnings stink yet again. I'm a BP fan and I got it right for now. BP is cutting back on new fossil fuel CAPEX and gradually investing in renewables. That makes sense because they are a European oil major. XOM and CVX are making cool powerpoint slides pretending they are into renewables going forward. I think XOM and CVX will be OK. I'm not so convinced they are real close to a bottom. I'm interested in XOM and CVX if they drop another 5-10% because I think they will shift gears as the market will demand it. They will survive for sure, but big funds have lost faith and are backing away. That's a big problem for now.