CHEVRON Group 1

Mackenzie Cato, Milka Cayoja, Kenny Fenson, Thomas Saab, Hoang Tran

OVERVIEW

New Mission

Strong values will be part of every company decision. Ethics and social responsibility are very important to our company. We aim to protect the environment, support human rights and benefit communities where we work.

New vision

Chevron aims to be the top global energy company by exploring new opportunities and making deals with partners around the world. We want to expand the into new markets and become the number one company in the industry. Strong values are the foundation of the success we have enjoyed as a company and we believe this will make us successful in the future as well.

Internal Assement

Strengths

  • Chevron is a leading company in the industry with 67,000 employees worldwide involved in tapping oil, gas, and geothermal energy, with a 4.7% share of the market.
  • In 2015 had 11.2 billion barrels of oil in reserve
  • Chevron has a presence worldwide with the upstream and downstream processes with capacity to expand producing and shipping to new and current markets

Weaknesses

  • In 2015 Chevron had a loss of the revenue of 44 %
  • Chevron is struggling with high levels of debt. Their debt ratio in 2015 reached 20.2%
  • From 2012 to 2016, revenue from Chevron's US drilling operations is expected to decrease at an annualized rate of 16.1% to about $10.3 billion

External Assessment

Opportunities

  • Global demand for gas and LNG are going to increase in the next 5 years
  • Markets such as Asia required more imports of crude oil and LNG
  • Renewable energy is also a huge focus for many companies
  • Natural gas is estimated to be the most important energy source for the future in the US and all over the world

Threats

  • Imports decreased from 12.55 billion barrel per day in 2005 to 7.45 million barrel per day in 2012
  • The United States continues seeking to lessen its reliance on foreign sources of oil and gas
  • Wages are expected to falling an average of 9.3% per year over the same five years to 2016
  • There is a high competition in the market.

SWOT Matrix

Matrices Analysis

  • BCG Matrix
  • Space Matrix
  • QSPM Matrix

RECOMMENDED STRATEGY

Expand the market through joint marketing ventures in Japan

The company has strategic locations all over the world to expand their market through joint ventures with other companies

Market in Asia

  • After analyzing the market in Asia, Japan became the most attractive market to expand into
  • Japan is the world's largest LNG importer at about 35% of global demand,
  • Their demand is expected to reach 3.75 Trillion cubic feet in 2016 and 4 Tcf in 2035
  • Currently most of the contracts with their suppliers are going to expire in 2017, and 2018, leaving room for Chevron to secure its own contracts.

Australia - Strategic proximity to Japan

  • Gorgon: LNG trains 1-2, Chevron having a 47.3% share. Their production capacity is 2.6 billion cubic feet of natural gas and 20,000 barrels of condensate per day with an estimated economic life of 40 years.
  • Wheatstone: 80.2% interest in the offshore licenses and 64.1% interest in the LNG facilities. The company produce 8.9 million metric tons of LNG a year, and the life for this project is 30 years

Analysis of Competition in Japan with TEPCO as a receiver

Capacity to sell: Chevron has the capacity to sell 9 million tons of LNG per year from the Gorgon project to TEPCO which has the capacity to receive with 15 stations an amount of 1.3 million metric tons a week.

Strategy implementation

  • 9 million metric tons a year over 54 LNG Transport cargoes
  • 7 ship in Australia with the need of three more in three years
  • Contract of 10 years with a possible expansion in the future for 20 years

Project Financial statements

Income Statement -Balance Sheet - Cash Flow with strategy

  • Chevron is estimating a revenue of $30 billion dollars and an increase in profit of $14 billion over ten years
  • Acquisition cost of these ships at $200 million dollars each will total to $600 million until 2019 increasing GPP&E
  • It will cost $90 million a year to operate at 10% depreciation on the three ships

Thank you

Credits:

Created with images by jonathan mcintosh - "Chevron Corporate Offices in Houston TX"

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