Case Study: Chevron Corporation (CVX)
The multinational Chevron Corporation dates back to its early beginnings in 1870 as Pacific Coast Oil Company. Following subsequent mergers, they eventually emerged as Standard Oil Company in 1911 after a forced divestiture into 34 independent companies by the U.S. Supreme Court under the Sherman Antitrust Act. It would later become Standard Oil Company of California (SoCal) after acquiring Pacific Oil Company in 1926. 10 years later, the SoCal joined forces with The Texas Company (a predecessor to Texaco) and formed Caltex Group of Companies, in order to manage interests of both entities in Middle East and Indonesia with an outlet through Texas Company's establish European market. With strategic mergers with companies such as Signal Oil and Standard Oil Kentucky, they were able to obtain 2,000 retail stations and gained outlets and market share in the southeast.
In 1984, they assumed the name Chevron Corporation after they acquired Gulf Corporation in what was the largest merger in history at the time. This merger doubled their oil and gas activities, as well as solidifying their presence industry. In a joint venture with the Republic of Kazakhstan, they were able to develop a giant oil reserve named Tengiz Field in 1993. Soon after acquired Rutherford-Moran Oil Corporation, as an inroad into the Asian natural gas market. They became the second largest U.S. based oil company under the name of ChevronTexaco Corporation when they merged with Texaco in 2001. In 2005 they boosted their Asia-Pacific and Caspian regions by acquiring Unocal Corporation. Under the name of Chevron Corporation, they increased branding efforts by unifying their presence in the global market under the name. Their most recent acquisition, Atlas Energy, Inc. provided a sharp increase in high quality acreage for future reserves. Company Profile
Currently, Chevron Corporation is the second largest energy company in the United States, and one of the largest companies in the world. It was ranked #3 in the Fortune 1000, and #9 in the FT Global 500. An employee incentive plan linked to performance and offering savings, stock ownership and benefits plans ensure an effective, top performing team able to focus on their priorities of people, execution and growth, and achieve the results expected by shareholders. Chevron currently has: Over 58,000 employees
Operations in 84 countries
$10.54 billion barrels of proven reserves
$198 billion in revenue
According to their annual report, its mission is to “provide the energy that drives human progress”, with a vision to be “the global energy company most admired for its people, partnerships, and performance.” INVESTMENTS
Chevron also has non-controlling investments in major affiliates including:
30% ownership in the Venezuelan heavy oil production project Petropiar 15% share in Caspian Pipeline
35% interest in natural gas project Angola LNG Ltd.
Petroleum products and petrochemical company GS Caltex Corporation in South Korea 50% share in Chevron Phillips Chemical Company LLC
64% ownership of Star Petroleum Refining Company Ltd. 64%
Caltex Australia 50% equity ownership
Despite a sharp decrease in revenue in 2009, Chevron was able to deliver strong financial results for 2010 and maintain its leadership in the industry, increasing net income from $10.5 billion to $19 billion. With operating revenue of $198 billion and a 17.4% return on capital, their competitive returns continue to appeal to investors and offer great returns to stockholders. Dividends increased by 6.8%, marking for the 23rd consecutive year for increases. Earnings per Share nearly doubled from 2009, rising from $5.24 to $9.48
In addition to shedding nonstrategic assets such as the Colonial Pipeline Company, Chevron was also able to reduce its short-term debt, thereby increasing...
References: * Brasileiro, Adriana and Millard, Peter. “Chevron executive charged in Brazil oil spill”. San Francisco Chronicle. Thursday, March 22, 2012
* Egelko, Bob. S.F. “Jury clears Chevron of protest shootings.” San Francisco Chronicle. Tuesday, December 2, 2008.
* Chevron Corporation. “2010 Annual Report.”
* “Chevron Corporation.” Datamonitor. August 18 2011.
* “Chevron fined for Amazon pollution by Ecuador Court.” BBC News Online. February 15, 2011.
* “Consent decree: United States of America v Chevron.” EPA.gov. June 5 7, 2005.
* Hoovers Company Profiles. “Company Profile: Chevron Corporation.”
* “United States Petrochemicals: Competitive Landscape United States Q2 2012.” Business Monitor International. March 27, 2012.
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