As Oil Heats Up, Chevron Is Set For Big Earnings Growth – No Wonder Warren Buffett Likes The Stock

As Oil Heats Up, Chevron Is Set For Big Earnings Growth – No Wonder Warren Buffett Likes The Stock

With the reflation trade having pushed oil prices up to $67 per barrel in recent days, all of a sudden life is looking good for Big Oil again, and especially for Chevron. Analysts figure that if oil prices averaged "just" $60/bbl over the next five years Chevron will end up sitting on more than $25 billion in cash after dividends (the stock yields 4. 7%) and capital investment (of $16 billion a year). That would go a long way toward paying down Chevron's debt load, which at a current $37 billion against $175 billion in capital is near the lowest levels in the industry. And it could get even better than that. According to Manav Gupta at Credit Suisse CS , for each $1 higher oil price, Chevron will collect an additional $500 million in incremental annual cash flow. No wonder Warren Buffett likes Chevron stock. During 2020 Berkshire Hathaway accumulated 48. 5 million Chevron shares worth $5. 3 billion. It's significant that Buffett bought Chevron rather than ExxonMobil, which at its nadir in 2020 had shed 50% of its equity value to the point that its market cap temporarily fell below that of the considerably smaller Chevron “” arguably