Bank of America's Doug Leggate Highlights Chevron, Occidental, and Exxon Mobil in Shaping a Stable Portfolio
The 2024 energy market presents challenges due to anticipated oil volatility from geopolitical risks in Ukraine, the Middle East, and OPEC policy shifts. Doug Leggate of Bank of America recommends defensive stocks, highlighting Occidental Petro (OXY), Chevron (CVX), and Exxon Mobil (XOM). These major players, fueled by significant acquisitions in 2023, promise substantial value.On a related note, Chevron's recent announcement indicates impairments to its U.S. upstream assets in Q4, primarily in California. Regulatory challenges have led to lower anticipated future investments, prompting Chevron to recognize a loss related to abandonment and decommissioning obligations in the U.S. Gulf of Mexico. This stems from assets previously sold to companies now under Chapter 11 bankruptcy protection. The aggregate impact, treated as special items, is estimated at non-cash, after-tax charges of $3.5 billion to $4.0 billion in Q4 2023.
Exxon Mobil, providing insights into its Q4 results, details factors influencing adjusted upstream earnings. Changes in gas prices are anticipated to positively impact Q4 earnings by $0.4-0.8 billion. However, impairments and other market factors, as outlined by the company, may have varying effects. Exxon's downgrade to Neutral from Buy at Mizuho, along with the downgrade of Occidental Petro to Neutral, reflects evolving market dynamics. These updates underscore the importance of strategic considerations amid fluctuating energy landscapes.
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