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Re: 919wil post# 637

Monday, 01/23/2017 9:32:35 AM

Monday, January 23, 2017 9:32:35 AM

Post# of 945
The Permian as a driver of earnings is more important to Chevron, at nearly 6% of its worldwide production, than it is to Exxon Mobil (3.5%) and ConocoPhillips (2%), let alone Shell, BP and TOTAL which will realize no or next to no benefit in the basin in the next several years. As a dividend aristocrat, Chevron does not play the game of repeated public share offerings intertwined with production growth and full reinvestment of incoming cash flows into CapEx. Free cash flow generation is paramount. As a result, examining the company's production and investment plans offers insights about the Permian's true potential.

On the other hand, if it turns out that prolific spots in the basin are more limited than previously hoped, Chevron is unlikely to grow its operations in the basin simply to show more growth, as this is not why many investors buy or hold the shares. In such a scenario, a failure to increase Permian CapEx might be seen. A large stake in the basin alongside with the focus on the free cash flow rather than just growth is what makes Chevron a particularly interesting company to watch as an indicator of the Permian's true worth - a canary in the Permian.

Purely My Own Opinion. Do Your Own Due Diligence.

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