Chevron Stock Sits Near Record High as it Plans Massive Venezuela Investment

Chevron (NYSE:CVX) stock has climbed steadily over the past few months and is now hovering near its all-time high as investors weigh the latest developments in its Venezuelan operations. Shares trade at $201, just a few points below the record of $210.

Chevron is Eyeing a Big Investment in Venezuela

President Donald Trump announced a big deal in which US companies will take part in developing Venezuelan oil resources. In a statement, Delcey Rodriguez said that the deal would last for 25 years and would target an increase in crude output to 1.5 million barrels a day. 

American companies are expected to make over $100 billion investment in the country, with the government receiving over $209 billion in taxes. Chevron, one of the top American companies with a presence in Venezuela is expected to be the main beneficiaries of the deal. According to the New York Times (NYSE:NYT), it could announce a deal to expand its operations this week.

Still, the deal faces substantial challenges, with Venezuelan politicians in all sides criticizing it. Also, the company will need to spend billions of dollars to develop these resources. There is also a possibility that oil prices will drop by the time it starts producing in the new locations.

The new Venezuelan details come at a time when Chevron is benefiting from the elevated oil prices. Brent and West Texas Intermediate have jumped to $88 and $83, respectively. 

Its recent earnings report showed that its total earnings rose to $12 billion in the second quarter, up sharply from $2.4 billion. Its year-to-date earnings rose to $14.2 billion from $5.9 billion last year, while its revenue soared to $67 billion.

Analysts Expect Modest Chevron Stock Jump

The new developments in Venezuela will likely attract commentary from analysts. In a recent note, Devin McDermott, a top analyst from Morgan Stanley, hiked is target from $210 to $218, up by 8.22% from the current level. 

TD Cowen’s Jason Gabelman hiked his target from $200 to $205, while Bernstein’s Bob Brackett boosted his target to $209. Other bullish analysts are from companies like Bank of America, Jefferies, and Royal Bank of Canada. 

The stock faces a major risk: oil prices. Unless kinetic action between the US and Iran resumes, oil prices may remain under pressure in the coming months, which will affect its revenue growth.

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