PASADENA, Texas - Chevron U.S.A., Inc. (CUSA), a subsidiary of Chevron Corporation (NYSE: NYSE:CVX), has announced the completion of a refinery retrofit in Pasadena, Texas. The energy giant, currently valued at $282.29 billion and trading near its 52-week high, appears undervalued according to InvestingPro analysis. The upgrade is set to enhance the refinery's capacity to process lighter crudes by nearly 15 percent, increasing its capacity to 125,000 barrels per day.
The Pasadena Refinery, acquired by Chevron in 2019, underwent this retrofit to expand its Gulf Coast refining system. With the completion of this project, Chevron aims to process a greater volume of equity crude from the Permian Basin, supply more products to the U.S. Gulf Coast market, and achieve synergies with its Pascagoula refinery. The company's strong financial health, evidenced by its EBITDA of $38.94 billion and moderate debt levels, positions it well for such strategic expansions. (InvestingPro subscribers have access to 8 more key financial insights about Chevron's operational efficiency.)
The Light Tight Oil (LTO) Project, which began planning in 2019 and commenced work in early 2020, focuses on improving facility reliability and safety. The refinery is also set to start producing jet fuel and exporting gas oil, contributing to an increase in domestic refined product supply.
Chevron Manufacturing President Chris Cavote expressed pride in the refinery's progress, highlighting its role in integrating Chevron's upstream and downstream operations and optimizing the value chain. Refinery General Manager Tifanie Steele commended the project's workforce for logging over 4 million hours to complete the retrofit safely and underscored the refinery's commitment to long-term success and positive economic impact on the local community.
The phased start-up of the upgraded facility is expected to continue through the first quarter of 2025 as the project team ensures that all plants are operating as planned and products meet specifications.
Chevron, one of the world's leading integrated energy companies and a prominent player in the Oil, Gas & Consumable Fuels industry, is focused on producing crude oil and natural gas, manufacturing transportation fuels, lubricants, petrochemicals, and additives, and developing technologies to enhance its business and the industry. The company is also working to grow its oil and gas business, reduce the carbon intensity of its operations, and expand into lower carbon businesses, including renewable fuels and carbon capture. For detailed analysis of Chevron's market position and growth strategy, access the comprehensive Pro Research Report available on InvestingPro, which covers 1,400+ top US stocks.
This news is based on a press release statement from Chevron Corporation.
In other recent news, Chevron has announced a reduction in its 2025 capital expenditure budget, aiming to enhance cash flow. The company's strategic shift focuses on financial discipline and cash flow growth, with the budget for the Permian Basin set to decrease by up to 10%. Despite this, Chevron plans to continue boosting its output from the Permian next year, albeit at a slower pace.
Piper Sandler reiterated its Overweight rating on Chevron, citing a positive outlook based on Chevron's strategic shift towards increased cash flow. The firm's discussions with Chevron's management revealed that the company's 2025 capital expenditures are projected to decrease by approximately $2 billion year-over-year, contributing to a significant increase in free cash flow.
BofA Securities upgraded Chevron to a Buy rating, highlighting the company's strong growth outlook. The firm noted Chevron's expected cash flow growth, driven by projects in the Gulf of Mexico, Tengizchevroil, and CP Chem. Truist Securities increased its price target on Chevron shares, maintaining a Hold rating, based on expectations of improved capital efficiency.
These are recent developments for Chevron, which has also seen a 7% increase in global production, resulting in Q3 2024 profits of $4.5 billion or $2.48 per share.
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