Industry Overview

The Oil Industry is a mature, cyclical industry which includes several lines of business. A typical company conducts oil exploration and development programs, refines and markets oil. The emphasis has long been on the "upstream" end, or exploration, since it generates the highest margins most of the time. Stocks in this industry are most appropriate for investors stressing above-average total return potential over a 3- to 5-year period. There is special suitability for conservative investors, given the solid financial strength of many of the companies and the comparative stability of their stock prices. Ties to the business cycle usually mean the industry doesn't do as well when the economy is in a downturn. But good dividend yields provide downside support.
Industry profits and capital spending are broadly determined by the level and direction of oil prices. Factors influencing prices include supply and demand, the futures market, and long-term sector expectations, among other things. Also, the single largest petroleum supplier, OPEC carries considerable weight when it makes a decision.
The appetite for crude oil and other energy sources is growing dramatically, with worldwide energy consumption projected to increase by more than 40 percent by 2035. The growing demand is fueled by a population that is predicted to increase 25 percent in the next 20 years, with most of that growth in countries with emerging economies, such as China and India. Rising energy demand from economic output and improved standards of living will likely put added pressure on energy supplies. For example, in China alone, demand is expected to increase by 75 percent by 2035.
Oil prices are expected to remain low as US is expected to increase its oil production in the coming years and with the Iran nuclear deal settled, the increases supply of oil by Iran will continue to keep oil prices low in the future hurting most oil company’s profits.
Company Overview
Chevron is one of the world's leading integrated energy companies. It is involved in virtually every facet of the energy industry. Chevron explores, produce and transport crude oil and natural gas; refine, market and distribute transportation fuels and lubricants; manufacture and sell petrochemical products; generate power and produce geothermal energy; provide renewable energy and energy efficiency solutions; and develop the energy resources of the future, including research into advanced biofuels. Chevron traces its beginnings to an 1879 oil discovery at Pico Canyon, north of Los Angeles, which led to the formation of the Pacific Coast Oil Co.
It has approximately 61,900 employees, including more than 3,600 service station employees. In 2012, Chevron's average net production was 2.61 million barrels of oil-equivalent per day. About 75 percent of that production occurred outside the United States. Chevron had a global refining capacity of 1.95 million barrels of oil per day at the end of 2012. Its marketing network supports retail outlets on six continents and has invested in 11 power-generating facilities in the United States and Asia.

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2010
2011
2012
Ratio Analysis
Revenue Growth
-37.13%
19.40%
23.80%
-4.65%

As shown in the table above, the sales of Chevron have been extremely volatile. This is largely because of the changes in oil prices. Chevron achieved highest sales volume in 2008 due to extremely high oil prices, but in 2009 the oil prices went down and in 2009 hich resulted in lower revenue. Since then the sales of chevron have increased until 2011 but declined again in 2012 due to lower oil prices. The revenue will continue to ge hurt from lowered oil prices and 2013 and Chevron is expected to shrink or grow at a extremely lower rate in 2013. But in the long run I believe that the company is expected to grow at a modest 3% rate based on increased demand of energy in developing countries like China and India.

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2010
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2012