A Financial Overview on Chevron Corporation (2007)

Final Term Paper

Fin 461: Financial derivativesSec: 01

A Financial Overview on Chevron Corporation

Submitted By

Souvik Ghosh 0520238Md. Fazle Rabbi 0310125

Syed Zubayer Alam 0420007

Submitted to:

C. R. MohsinInstructor, FinanceSchool of Business

Independent University, Bangladesh1st May 2008

Table of Contents

Company profile

Competitors

Income statement of three years

Balance sheet of three years

Options Chain data with expiration

Ratio analysis and financial trend

1. Net profit margin 2. Gross profit margin 3. Return on assets 4. Return on equity 5. Current ratio 6. Acid test ratio 7. Total debt to equity ratio 8. Total debt to total asset ratio 9. Interest coverage 10. Inventory turnover 11. Asset turnover

Summary for three year cash flow

NASDAQ analysis and recommendation

Option Valuation Model with calculation and comparison

Current and future stock chart

Recommended option strategy and rational

Company Profile

Chevron Corp.is one of the largest integrated energy companies of the world. It is, in fact,

one of the world's six "supermajor" oil companies and the fifth largest global energy

company, which has it's headquarter in San Ramon, California, USA and active in more than

180 countries.

The company was founded in 1879. It was previously known as "Standard Oil Company of

California" and changed its name to "Chevron Corporation" in 1984. Further, it changed its

name to "ChevronTexaco Corporation" in 2001 and finally to "Chevron Corporation" in

2005.

Chevron corp. employs approximately 59,000 people worldwide (of which 27,000 are U.S.-

based) and had approximately 12 billion barrels (1.9 km³) of oil-equivalent net proved

reserves at December 31, 2003. Daily production in 2003 was 2.5 million net oil-equivalent

barrels (400,000 m³) per day.

Chevron Corporation operates as an integrated energy company worldwide. The company is

engaged in every aspect of the oil and gas industry, which include power generation, coal

mining, e xploration and production, refining, chemicals manufacturing and sales, marketing

crude oil and products derived from petroleum, transporting crude oil, natural gas and

petroleum products by pipeline, marine vessel, motor equipment, and rail car and some other

activities like insurance, and real estate activities.

In addition, the company has a worldwide marketing network in 84 countries with

approximately 24,000 retail sites. The company also has interests in 13 power generating

assets in the United States, Asia, and Europe. Chevron Corp. also has gas stations in Western

Canada.

Chevron Corp. is the only brand of gas used by several automakers when testing vehicles,

including General Motors and Toyota. (Ford does as well despite a strategic alliance with

BP.) Chevron Corp. also has often had one of the highest brand loyalty rates for gasoline in

America.

Finally, Chevron Corp. is the owner of the "Standard Oil" trademark in a 16-state area of the

western and southeastern United States. To maintain ownership of the mark, the company

owns and operates one Standard-branded Chevron station in each state of its area. "Standard

http://en.wikipedia.org/wiki/Standard_Oil

http://en.wikipedia.org/wiki/BP

http://en.wikipedia.org/wiki/Ford_Motor_Company

http://en.wikipedia.org/wiki/Toyota

http://en.wikipedia.org/wiki/General_Motors_Corporation

http://en.wikipedia.org/wiki/Western_Canada

http://en.wikipedia.org/wiki/Western_Canada

http://en.wikipedia.org/wiki/Europe

http://en.wikipedia.org/wiki/Asia

http://en.wikipedia.org/wiki/Electricity_generation

http://en.wikipedia.org/wiki/Refining

http://en.wikipedia.org/wiki/Petroleum#Extraction

http://en.wikipedia.org/wiki/Exploration

http://en.wikipedia.org/wiki/Power_generation

http://en.wikipedia.org/wiki/Gas

http://en.wikipedia.org/wiki/Petroleum

http://en.wikipedia.org/wiki/2003


http://en.wikipedia.org/wiki/December_31

http://en.wikipedia.org/wiki/Supermajor

Oil" was a predominant integrated oil producing, transporting, refining, and marketing

company which was dissolved by the United States Supreme Court in 1911. Chevron Corp.

also is currently the owner of the trademark rights to Texaco brand gasoline.

Chevron Corp. achieved the highest annual earnings in the company’s history of $18.7 billion

in 2007. It has increased the quarterly stock dividend by 11.5 percent and has invested $20

billion in the company’s businesses. The companies focus continues on exploration and

production activities and upgrades to the refinery network.

Chevron Corp. also has reduced total debt by $2.6 billion and thus reduced the ratio of debt to

debt-plus-equity from 12.5 percent to 8.6 percent.

It achieved Sales and other operating revenues of $214.1 billion. The Net income was $18.7

billion. The Return on capital employed 23.1%, Return on average stockholders’ equity was

25.6%. Cash dividends were $2.26 per share and Total stockholder return was 30.5% in 2007.

Competitors

http://en.wikipedia.org/wiki/Supreme_Court_of_the_United_States

http://en.wikipedia.org/wiki/United_States


Chevron Corp. has 2 major competitors present in the market; Exxon Mobil corp. and Bp

p.l.c. Apart from these 2 companies there are other 3 companies from the "supermajors", non

state-owned energy companies, who are also competing with chevron corp.

Exxon Mobil Corporation:

Exxon Mobil Corporation is an American oil and gas corporation formed in 1870 also known

as ExxonMobil. ExxonMobil is the world's largest company by revenue, at $404.5 billion for

the fiscal year of 2007. It is the largest of the six oil supermajors with daily production of

4.18 million BOE (barrels of oil equivalent) in 2007.

Exxon Mobil Corporation engages in the exploration, production, transportation, and sale of

crude oil and natural gas and also engages in the manufacture of petroleum products, and

transportation and sale of crude oil, natural gas, and petroleum products.

Exxon Mobil also has interests in electric power generation facilities. The company operates

in the United States, Canada, Europe, Africa, Asia-Pacific, the Middle East, Russia/Caspian

region, and South America.

Bp P.l.c. :

The BP P.l.c, formerly known as "British Petroleum", is one of the main competitors of

Chevron corp. It has it's headquarter in London, England, UK and founded in 1889. The

company has market capital of $ 218.09 Billion and the revenue was $ 284.37 Billion last

fiscal year. The quarterly revenue growth is 28.90% and finally the net income was $ 20.84

Billion.

BP p.l.c. provides fuel for transportation, energy for heat and light, retail services, and

petrochemicals products. It operates in two segments, Exploration and Production, and

Refining and Marketing. It has exploration and production activities in the United States, the

United Kingdom, Angola, Azerbaijan, Canada, Egypt, Russia, and Trinidad and Tobago, as

well as in Asia Pacific, Latin America, and the Middle East.

http://en.wikipedia.org/wiki/Barrels_of_oil_equivalent



http://en.wikipedia.org/wiki/United_States

The Refining and Marketing segment engages in the supply and trading, refining, marketing,

and transportation of crude oil, petroleum, and chemical products to wholesale and retail

customers under the Amoco and BP brands.

Royal Dutch Shell p.l.c.:

Royal Dutch Shell plc is a multinational oil company of British and Dutch origins. It is one of

the largest private sector energy corporations in the world, and one of the six "supermajors".

The company engages in the exploration, production, and trading of various energy resources

worldwide. Royal Dutch Shell plc is based in The Hague, the Netherlands.

It operates in five segments: Exploration and Production, Gas and Power, Oil Sands, Oil

Products, and Chemicals. Shell's revenues of $318.8 billion in 2006 made it the third-largest

corporation in the world by revenues behind only ExxonMobil and Wal-Mart. Its 2006 gross

profits of $26 billion made it the world's second most profitable company, after ExxonMobil

and before BP. Forbes Global 2000 in 2007 ranked Shell the eighth largest company in the

world.

The Royal Dutch/Shell Group of companies was created in February 1907.

Total S.A.:

The Total S.A is another of the "supersix" oil company headquartered in Paris, France. Its

businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and

production to power generation, transportation, refining, petroleum product marketing, and

international crude oil and product trading. Total is also a large-scale chemicals

manufacturer.

Total operates in more than 130 countries and has over 111,000 employees. It was formed in

March 28, 1924.

ConocoPhillips Company:


http://en.wikipedia.org/wiki/March_28

http://en.wikipedia.org/wiki/Chemical_industry


http://en.wikipedia.org/wiki/Refining

http://en.wikipedia.org/wiki/Transportation

http://en.wikipedia.org/wiki/Power_generation

http://en.wikipedia.org/wiki/Natural_gas

http://en.wikipedia.org/wiki/Crude_oil

http://en.wikipedia.org/wiki/France

http://en.wikipedia.org/wiki/Paris

http://en.wikipedia.org/wiki/Forbes_Global_2000

http://en.wikipedia.org/wiki/BP

http://en.wikipedia.org/wiki/Wal-Mart

http://en.wikipedia.org/wiki/ExxonMobil


http://en.wikipedia.org/wiki/Energy

http://en.wikipedia.org/wiki/Private_sector

http://en.wikipedia.org/wiki/Netherlands

http://en.wikipedia.org/wiki/United_Kingdom

http://en.wikipedia.org/wiki/Multinational_corporation

http://en.wikipedia.org/wiki/Public_limited_company

ConocoPhillips Company is another international energy corporation with its headquarters

in Houston, Texas. It was created through the merger of Conoco Inc. and the Phillips

Petroleum Company on August 30, 2002. It is one of the six "supermajor" vertically

integrated oil companies.

ConocoPhillips employs approximately 32,700 people worldwide in nearly 40 countries. In

addition, as of 2006, their 12 U.S. refineries had a combined crude processing capacity of

2,208,000 barrels per day (351,000 m³/d) (BPD) making it the second-largest refiner in the

United States.

Another significant competitor present in the market is,

PetroChina Co. Ltd.:

PetroChina Company Limited, together with its subsidiaries, engages in petroleum and

natural gas related activities in the People's Republic of China.

It operates in four segments: Exploration and Production, Refining and Marketing, Chemicals

and Marketing, and Natural Gas and Pipeline.

As of December 31, 2006, the company had estimated proved reserves of approximately

11,618 million barrels of crude oil and approximately 53,469.2 billion cubic feet of natural

gas, as well as operated 18,207 units of service stations.

It owned and operated 20,590 kilometers of natural gas pipeline networks, 9,620 kilometers

of crude oil pipeline, and 2,413 kilometers of pipeline for refined products. The company was

founded in 1988 and is headquartered in Beijing, China.

Income Statement of Three Years

(Figures in Millions)



http://en.wikipedia.org/wiki/August_30

http://en.wikipedia.org/wiki/Phillips_Petroleum_Company

http://en.wikipedia.org/wiki/Phillips_Petroleum_Company

http://en.wikipedia.org/wiki/Conoco_Inc.

http://en.wikipedia.org/wiki/Merger

http://en.wikipedia.org/wiki/Houston%2C_Texas

Particulars\Years 2007 2006 2005

Revenues and Other Income:

Sales and Other Operating Revenues:

Upstream and Downstream:

Refined Products:

Gasoline 47,074 42,639 39,491

Jet fuel 16,333 15,577 13,606

Gas oils and kerosene 32,170 31,647 27,572

Residual fuel oils 7,348 7,086 6,681

Other refined products 5,886 5,723 4,726

Total Refined Products 108,811 102,672 92,076

Crude oil and condensate 61,542 61,842 66,552

Natural gas 24,437 22,515 18,248

Natural gas liquids 4,483 3,488 3,211

Other petroleum revenues 2,460 2,862 3,145

Excise taxes 9,959 9,486 8,705

Total Upstream and Downstream 211,692 202,865 191,937

Chemicals 1,582 1,395 1,117

All Other 817 632 587

Total Sales and Other Operating

Revenues214,091 204,892 193,641

Income from equity affiliates 4,144 4,255 3,731

Other income 2,669 971 828

Total Revenues and Other Income 220,904 210,118 198,200

Income Statement Continues…

…Income Statement Continued

Costs and Other Deductions:

Purchased crude oil and products 133,309 128,151 127,968

Operating expenses 16,932 14,624 12,191

Selling, general and administrative

expenses5,926 5,093 4,828

Exploration expenses 1,323 1,364 743

Depreciation, depletion and amortization 8,708 7,506 5,913

Taxes other than on income 22,266 20,883 20,782

Interest and debt expense 166 451 482

Minority interests 107 70 96

Total Costs and Other Deductions 188,737 178,142 173,003

Income From Continuing

Operations Before Income

Tax Expense

32,167 31,976 25,197

Income tax expense 13,479 14,838 11,098

Net Income 18,688 17,138 14,099

Balance sheet of three years



Assets:

Current Assets:

Cash and cash equivalents 7,362 10,493 10,043

Marketable securities 732 953 1,101

Accounts and notes receivable 22,446 17,628 17,184

Inventories:

Crude oil and petroleum products 4,003 3,586 3,182

Chemicals 290 258 245

Materials, supplies and other 1,017 812 694

Total inventories 5,310 4,656 4,121

Prepaid expenses and other current assets 3,527 2,574 1,887

Total Current Assets 39,377 36,304 34,336

Long-Term Assets:

Long-term receivables, net 2,194 2,203 1,686

Investments and advances 20,477 18,552 17,057

Properties, Plants and Equipments:

Properties, plant and equipment, at cost 154,084 137,747 127,446

Less: Accumulated depreciation, depletion and

amortization75,474 68,889 63,756

Net properties, plant and equipment 78,610 68,858 63,690

Total Long Term Assets 101,281 89,613 82,433

Deferred charges and other assets 3,491 2,088 4,428

Goodwill 4,637 4,623 4,636

Total Assets 148,786 132,628 125,833

Balance Sheet Continues…

…Balance Sheet Continued


Liabilities and Stockholders’ Equity:

Liabilities:

Current Liabilities:

Short-term debt 1,162 2,159 739

Accounts payable 21,756 16,675 16,074

Accrued liabilities 5,275 4,546 3,690

Federal and other taxes on income 3,972 3,626 3,127

Other taxes payable 1,633 1,403 1,381

Total Current Liabilities 33,798 28,409 25,011

Long Term Liabilities:

Long-term debt and capital lease obligations 6,070 7,679 12,131

Deferred credits and other non current obligations 15,007 11,000 10,507

Non current deferred income taxes 12,170 11,647 11,262

Reserves for employee benefit plans 4,449 4,749 4,046

Minority interests 204 209 200

Total Long Term Liabilities 71,698 63,693 63,157

Total Liabilities 71,698 63,693 63,157

Stockholders’ Equity 77,088 68,935 62,676

Total Liabilities and Stockholders’

Equity

148,786 132,628 125,833

Options Chain Data

May 2008, Expiration At 17th

Call Options

Released At March 17th 2008

Strike Symbol Last Chg Bid Ask Vol Open Int

70 CVXEN.X 16 0 N/A N/A 5 5

75 CVXEO.X 16 0 N/A N/A 114 157

80 CVXEP.X 13 0 N/A N/A 1 613

85 CVXEQ.X 8.1 0 N/A N/A 24 2,120

90 CVXER.X 4.1 0 N/A N/A 494 11,020

95 CVXES.X 1.5 0 N/A N/A 1,268 7,451

100 CVXET.X 0.3 0 N/A N/A 748 1,992

105 CVXEA.X 0.1 0 N/A N/A 100 9

Put Options

Released at March 17th 2008


70 CVXQN.X 0.05 0 N/A N/A 2 18

75 CVXQO.X 0.05 0 N/A N/A 107 469

80 CVXQP.X 0.1 0 N/A N/A 118 1,453

85 CVXQQ.X 0.4 0 N/A N/A 7,344 18,809

90 CVXQR.X 1.5 0 N/A N/A 4,060 6,260

95 CVXQS.X 3.9 0 N/A N/A 571 1,417

100 CVXQT.X 8.2 0 N/A N/A 213 139

105 CVXQA.X 13 0 N/A N/A 1 4

September 2008, Expiration At 20th

Call Options

Released at 20th January

Strike Symbol Last Chg Bid Ask VolOpen

Int

60 CVXIL.X 27.1 0 N/A N/A 1 126

65 CVXIM.X 21.7 0 N/A N/A 0 460

70 CVXIN.X 23.2 0 N/A N/A 2 313

75 CVXIO.X 18.8 0 N/A N/A 44 648

80 CVXIP.X 14.7 0 N/A N/A 11 5,775

85 CVXIQ.X 10.4 0 N/A N/A 1,035 1,728

90 CVXIR.X 7.5 0 N/A N/A 8 4,909

95 CVXIS.X 4.77 0 N/A N/A 155 3,356

100 CVXIT.X 2.89 0 N/A N/A 61 9,164

105 CVXIA.X 1.65 0 N/A N/A 150 1,951

110 CVXIB.X 0.9 0 N/A N/A 293 826

Put Options

Released at 20th January


60 CVXUL.X 0.3 0 N/A N/A 10 3,054

65 CVXUM.X 0.4 0 N/A N/A 15 8,282

70 CVXUN.X 0.7 0 N/A N/A 10 3,827

75 CVXUO.X 1.2 0 N/A N/A 13 2,560

80 CVXUP.X 1.9 0 N/A N/A 13 8,248

85 CVXUQ.X 3.2 0 N/A N/A 55 1,192

90 CVXUR.X 4.8 0 N/A N/A 10 2,688

95 CVXUS.X 7.3 0 N/A N/A 108 808

100 CVXUT.X 10 0 N/A N/A 216 537

105 CVXUA.X 14 0 N/A N/A 30 406

110 CVXUB.X 25 0 N/A N/A 0 698

January 2009, Expiration at 17th January

Call Options

Released at 17th June 2007


65 VCHAM.X 26 0 N/A N/A 4 3,314

70 VCHAN.X 24.4 0 N/A N/A 6 10,284

75 VCHAO.X 17.9 0 N/A N/A 25 4,608

80 VCHAP.X 17.2 0 N/A N/A 23 19,464

85 VCHAQ.X 13.6 0 N/A N/A 10 10,013

90 VCHAR.X 10.7 0 N/A N/A 19 28,363

95 VCHAS.X 8 0 N/A N/A 43 13,760

100 VCHAT.X 5.71 0 N/A N/A 56 11,318

105 VCHAA.X 4 0 N/A N/A 95 2,991

110 VCHAB.X 2.8 0 N/A N/A 100 6,486

120 VCHAD.X 1.15 0 N/A N/A 3 1,173

Put Options

Released at 17th June 2007


65 VCHMM.X 1.35 0 N/A N/A 3 7,362

70 VCHMN.X 1.85 0 N/A N/A 12 16,790

75 VCHMO.X 2.4 0 N/A N/A 5 4,205

80 VCHMP.X 3.6 0 N/A N/A 2 24,695

85 VCHMQ.X 5.1 0 N/A N/A 5 8,988

90 VCHMR.X 7.1 0 N/A N/A 6 20,923

95 VCHMS.X 9.3 0 N/A N/A 1 788

100 VCHMT.X 12.4 0 N/A N/A 10 1,566

105 VCHMA.X 15.1 0 N/A N/A 17 323

110 VCHMB.X 21 0 N/A N/A 1 288

120 VCHMD.X 36.1 0 N/A N/A 1 302

Ratio analysis and financial trend

PROFITABILITY RATIOS:

Net Profit Margin = Net income

Revenue

For 2007, Net Profit Margin = 18,688,000,000/220,904,000,000 = 0.085



Net profit margin tells us about how much of the revenue generated by a company can

be kept as profit for the company. From the data above, it can be seen that the net profit

margin of Chevron Corporation is increasing since their net income has increased over the

past three years. Although the revenue also increased but the margin of increase in revenue

was comparatively low. However, the marginal profit in 2007 was less compare to the

previous two years, which is due to less increase in net income from 2006 to 2007 than it was

from 2005 to 2006.

Gross Profit Margin = Revenue – Cost of goods sold

Revenue

For 2007, Gross Profit Margin = (220,904,000,000-134,632,000,000)/220,904,000,000

= 0.391


= 0.314


= 0.289

Gross Profit Margin allows us to see the profit after operating expenses only have

been taken into account. This ratio of the company has a positive trend as well and it

increased by a good margin in 2007 where the cost of goods sold has decreased.

MANAGEMENT EFFECTIVENESS:

Return on Assets = Net income

Total Assets

For 2007, Return on Assets = 18,688,000,000/148,786,000,000 = 0.126



Return on Assets shows the profitability of a company relative to its total assets. This

ratio of Chevron, however, has fluctuated in the past three years. Although the net income

and total assets of Chevron has increased but in the last year, the net income has increased by

smaller margin compare to the previous two years due to higher expenses. The total asset has

also increased but by a large margin than the previous years. So, the ROA ratio increased in

2006 from 2005 but fell in 2007.

Return on Equity = Net income

Total Equity

For 2007, Return on Equity = 18,688,000,000/77,088,000,000 = 0.242



Return on Equity shows the profit per dollar earned from the investors’ investments. This

ratio also fell in the last year in comparison to the previous years, as said earlier, due to less

marginal increase in net profit in 2007 and, in this case, much higher total stockholders’

equity.

FINANCIAL STRENGTH/ SOLVENCY RATIOS:

Current Ratio = Current Assets

Current Liabilities

For 2007, Current Ratio = 39,377,000,000/33,798,000,000 = 1.165



The current ratio tells us how well a company is able to pay off its short-term debt using its

most liquid assets. This ratio is definitely not good for Chevron as it is decreasing, which

demonstrate that financial solvency of the company is weakening. Although, both the current

assets and current liabilities have increased in the past three years, the marginal increase in

current liability was higher than that of current assets as cash and marketable securities have

decreased under current assets.

Quick/ Acid Test Ratio = Current Assets – Inventory

Current Liabilities

For 2007, Quick/Acid Test Ratio = (39,377,000,000-5,310,000,000)/33,798,000,000

= 1.008


= 1.114


= 1.208

This ratio is much like current ratio but as inventory is subtracted, this ratio becomes better

test of liquidity of a company. Like current ratio, this ratio also decreasing due to same reason

stated above in current ratio section. Here, another reason can be found and that is inventory.

The amount of inventory of Chevron is increasing, which indicates that the sales of Chevron

are not reaching up to the company’s own expectation and that is why the inventory is pilling

up.

Total Debt-to-equity Ratio = Total Liabilities

Total Equity

For 2007, Total Debt-to-equity Ratio = 71,698,000,000/77,088,000,000 = 0.930



Debt-equity ratio determines the financial leverage of a company. This ratio shows the

amount of financing activity done by investors and the amount of loan taken by the company.

The lower the ratio, the better is the financial leverage of the company. In 2006, the ratio was

the lowest due to less marginal increase in total liability but the ratio increased in 2007 where

both the total liability and the equity increased but the marginal liability increased higher than

the equity. So the ratio is slightly higher than 2006.

Total Debt-to-Total Asset Ratio = Total Liabilities

Total Assets

For 2007, Total Debt-to-Total Asset Ratio = 71,698,000,000/148,786,000,000 = 0.482



This ratio is almost similar to Debt-equity ratio but here the ratio shows how much of

the company’s assets are financed through debts.

Interest Coverage = EBITDA

Interest Expense

For 2007, Interest Coverage = 32,440,000,000/166,000,000 = 195.422



This ratio shows how well a company can cover its interest payments. Since, the ratio has

increased over the past three years due to decrease in the interest expense; it can be stated that

Chevron’s ability to pay its debt has grown up significantly.

EFFICIENCY RATIOS:

Inventory Turnover = Cost of goods sold

Average inventory

For 2007, Inventory Turnover = 134,632,000,000/4,983,000,000 = 27.02



Inventory turnover ratio tells us how fast a company can sell its products, usually in a year. In

this case, however, the ratio has regularly decreased in the last three years, which indicates

that the company’s sales are going down, resulting in a higher average inventory.

Asset Turnover = Revenue

Total Assets

For 2007, Asset Turnover = 220,904,000,000/148,786,000,000 = 1.485



The asset-turnover ratio shows how much of revenue is generated from every unit of assets.

This ratio, also, has decreased in the last year due to lower marginal increase in revenue in

comparison to marginal increase in total assets, which indicates that, the company’s

efficiency has decreased now than it was in the previous two years.

Summary for three year cash flow


Particulars\Year 2007 2006 2005

Operating Activities

Net income 18688 17138 14099

Adjustments:

Depreciation, depletion and amortization 8708 7506 5913

Dry hole expense 507 520 226

Distributions (less) than income from equity affiliates(1439

)(979) 1304

Net before-tax gains on asset retirements and sales(2315

)(229) (134)

Net foreign currency effects 378 259 62

Deferred income tax provision 261 614 1,393

Net decrease (increase) in operating

working capital composed of:

(Increase) decrease in accounts and notes receivable(3867

)17

(3164

)

(Increase) decrease in inventories (749) (536) (968)

(Increase) decrease in prepaid expenses and other current

assets(370) (31) (54)

Increase in accounts payable and accrued liabilities 4930 1246 3851

Increase (decrease) in income and other taxes payable 741 348 281

Net decrease (increase) in operating working capital 685 1044 (54)

Minority interest in net income 107 70 96

(Increase) decrease in long-term receivables (82) (900) (191)

(Increase) decrease in other deferred charges (530) 232 668

Cash contributions to employee pension plans (317) (449)(1022

)

Other 326 (503) 353

Net Cash Provided by Operating Activities2497

7

2432

3

2010

5

Cash Flow Continues…

…Cash Flow Continued

Particulars\Year 2007 2006 2005

Investing Activities

Cash portion of Unocal acquisition,

net of Unocal cash receivedN\A N\A (5934)

Repayment of loans by equity affiliates 21 463 57

Proceeds from asset sales 3338 989 2681

Marketable securities purchased (1975) (1271) (918)

Marketable securities sold 2160 1413 1254

Net sales (purchases) of marketable securities 185 142 336

Net purchases of other short-term investments (799) N\A N\A

Net Cash Used for Investing Activities(13933

)

(12219

)

(11561

)

Financing Activities

Net (payments) borrowings of short-term obligations (345) (677) (109)

Repayments of long-term debt

and other financing obligations(3343) (2224) (966)

Net (purchases) sales of treasury shares (6389) (4491) (2597)

Cash dividends – Common stock (4791) (4396) (3778)

Dividends paid to minority interests (77) (60) (98)

Redemption of preferred stock by subsidiaries N\A N\A (140)

Proceeds from issuances of long-term debt 650 N\A 20

Net Cash Used for Financing Activities(14295

)

(11848

)(7668)

Effect of Exchange Rate Changes 120 194 (124)

on Cash and Cash Equivalents

Net Change in Cash and Cash Equivalents (3131) 450 752

Cash and Cash Equivalents at January 1 10493 10043 9291

Cash and Cash Equivalents at December 31 7,362 10,493 10,043

Summary

The first thing that can easily be noticeable from the cash flow of Chevron corp. is, the net

income has raised to $ 18688 million in 2007, a $ 1000 million higher than 2006. Then the

next noticeable item is from "The operating activities, cash flows provided by or used in"

section. It is the change in account receivables. In 2007 the amount is very high than in 2006.

But the amount of changes in account receivables was highest in 2005 to $ 191 million. The

A/R change in 2007 is very high because of probably the long term payment facilities

provided by Chevron corp. or management error. The change in liabilities also increased in

2007 while it was a positive $ 1594 million in 2006.

So, finally total cash flow from operating activities rose to, 3 years high at $ 24977 million, in

2007.

Chevron and its partners made a final investment decision in 2007 for the 5.2 million metric-

ton-per-year onshore Angola LNG project and investments are also made in Agbami in

Nigeria and Blind Faith in the U.S. Gulf of Mexico. Hence, the capital expenditure and

investment rose respectively to $ 16678 million and $ 593 million in 2007, which were also 3

years high. The important thing to notice is that, the other cash flows from investing activities

increased to $ 3338 million, while it was $ 989 million in 2006 and negative $ 3253 million

in 2005.

The total cash flow from investing activities was 3 years high in 2007 at $ 13933 million.

The “Financing Activities, Cash Flows Provided By or Used In” shows some important

information like, dividend payment, sale purchase of stock and net borrowings and finally all

in sum, total cash flows from financing activities, was high in 2007 at respectively $ 4868

Million $ 6389, $ 3038 million and $ 14295, these all are 3 years high in comparison between

2005-06-07. All these figures denote that the company is doing better business and giving

more dividends to the stockholders and increasing sale purchase of stocks.

The effect of exchange rate changes impacted the whole economy since 2001. In 2007

Chevron corp. had positive $ 120 million effect of exchange rate changes that is bit lower

than in 2006, $ 194 million. But this figure was negative in 2005.

Overall the change in cash and cash equivalents was negative in 2007 of minus $ 3131

million, mainly due to heavy investments in different businesses all across the world.

NASDAQ analysis and recommendation

Consensus Recommendation Detailed Analyst Recommendation

Each recommendation received from contributors is mapped to one of the I/B/E/S standard

ratings. A consensus recommendation is determined by an average of the numeric values,

rounding that mean value to the nearest integer. This area currently displays US research

coverage only. In many cases, non-US related research coverage can be accessed from the

homepage of the respective company.

12 Month Price Target Range Earnings Surprise

Consensus

100

55

92.5

Previous Close

116

Price targets are calculated by estimating

future earnings per share and then applying a

price-to-earnings multiple, known as the P/E

ratio.

2.29

1.72

1.15

0.58

Sep06Dec06Mar07Jun07Sep07Dec07

Estimate Reported Earning

http://www.nasdaq.com/earnings/analyst_recommendations.asp?symbol=CVX&selected=CVX

Momentum (4 Weeks)

12/2008 17 of 22 estimates changed

Up:

10

Down:

7

12/2008 EPS Mean % change

4.685%

9.691 1 Month

Ago

10.145 Current

Estimate momentum measures changes in analyst sentiment over time and may be an

indicator of future price movements.

Detailed Estimates Submitted

Earnings Growth (12/2008) Price/Earnings (12/2008)

CVX 21.5%

Industry*25.83

%

*OIL

CVX 9.12

Industry* 12.

4

Earnings Growth is the measure of year on

year earnings per share (EPS) growth from the

prior fiscal year, expressed as a percentage.

*OIL

Price/Earnings ratio is a widely used stock

evaluation measure.

Consensus Earnings Forecasts PEG Ratio

8.35 10.14/2210.22/21

2007A 2008 2009

The actual reported earnings per share for

12/2007 for CVX was 8.35. For the fiscal year

12/2008, the consensus mean EPS is 10.14,

derived from a total of 22 estimates.

The PEG ratio is the Price Earnings ratio

divided by the growth rate. In this case we use

the forecasted earnings over the next 12

months and the long term forecasted growth

rate (based on the consensus of professional

analysts.)

Chevron Corp. Technical Chart

Last Trade: 92.70

Trade Time: Apr 21

Change: 0.00 (0.00%)

Prev Close: 92.50

Open: N/A

Bid: N/A

Ask: N/A

1y Target Est: 98.17

Day's Range: N/A - N/A

52wk Range: 76.40 - 95.50

Volume: 0

Avg Vol (3m): 11,848,100

Market Cap: 192.09B

P/E (ttm): 10.55

EPS (ttm): 8.77

Div & Yield: 2.32 (2.50%)

Fundamental Analysis

From the consensus and analyst recommendation we can see that most of the analysts are

suggesting holding the stock and buy them. The price target is calculated at $ 100 while it is

now $ 92.5. Thus, the consensus is estimating the price will go up in future.

The earnings surprise graph shows that, in 2007 the estimated and reported earning are

almost close to each other while most of the time the reported earnings are lower than

estimated. But the difference is very little.

17 of 22 analyst estimates have been changed in recent 4 weeks. 10 of them now changed

their opinion to buy, hold or strong buy the stocks while 7 of them changed their opinion to

opposite.

The earnings per share mean's percentage change is currently 10.146, while it was 9.691 last

month. Thus it increased a bit in a month.

From the earnings growth we can see that, chevron corp. earning growth is bit lower than the

oil industry, 21.5% and 25.83%, but this is not a significant difference. The P/E ratio for

chevron corp. is 9.12 and for the industry it is 12.40. This not a big difference in a market

containing only 5-6 major competitors.

The next thing to watch is the consensus earnings forecast. This graph shows that the

earnings are expected to rise in near future.

The PEG ratio shows that the stocks are overvalued as the P/E is greater than the growth.

Finally we get a mixed idea about the company from the fundamental analysis, as the

"Earnings surprise" and "P/E" graphs did not favor much the idea of buying or holding the

stocks while, on the other hand, "12 Month Price Target Range", "EPS Mean % change" and

"Consensus Earnings Forecasts" parts are suggesting to hold or buy the stock.

Technical Analysis

The 2 years Chevron Corp. technical chart shows that it is upward rising from 2006 but there

are some falls in the chart. The interesting thing to notice is that despite the U.S. recession

and downfall of the world economy the graph is still upward rising and the 1 year estimate is

$ 98.17, while it is now $ 92.50. Despite two falls in mid February and March, the chart is

uprising since January 2008.

And from the chart we can see that in 2007, the chart was moving upward during May, June,

July and August. So the historic analysis provides support that the chart may move upward

during the month of May and later on.

From the technical chart we can thus get the idea that the stock price will move up in May but

there is risks of short falls as it already occurred twice this year.

Cash flow and Options Chain Analysis

From the cash flow of Chevron corp. it can be seen that, the net income has been raised to $

18688 million in 2007, a $ 1000 million higher than 2006. The change in liabilities also

increased in 2007 while it was a positive $ 1594 million in 2006.The total cash flow from

operating activities rose to $ 24977 million, in 2007.

The other cash flows from investing activities increased to $ 3338 million, while it was $ 989

million in 2006 and negative $ 3253 million in 2005. The total cash flow from investing

activities was $ 13933 million.

The “Financing Activities, Cash Flows Provided By or Used In” shows some important

information like, dividend payment, sale purchase of stock and net borrowings and finally all

in sum, total cash flows from financing activities, was high in 2007 at respectively $ 4868

Million $ 6389, $ 3038 million and $ 14295, these all are 3 years high in comparison between

2005-06-07. All these figures denote that the company is doing better business and giving

more dividends to the stockholders and increasing sale purchase of stocks.

Overall the change in cash and cash equivalents was negative in 2007 of minus $ 3131

million, mainly due to heavy investments in different businesses all across the world.

The option chain data for May and September 2008 and January 2009 is presented here. From

the chain data, we can see that,

In May, the highest number of open interest for the call option is $ 90 and for put option, it is

$ 85. The call option highest number of interest is below current stock price $ 92.50.

Probably because people are estimating a short fall in the price of the stock because of recent

U.S. recession and economic slowdown all across the worlds. The second highest number of

open interest is at $ 95. At this rate people are expecting the market will not fall and the rise

in the stock price will continue.

In September, the highest number of open interest for the call option is at $ 100 and for put

option, it is $ 80. The gap is $ 20, which is very huge and it is obvious that investors are very

confused about the market situation.

In January 2009, the highest number of open interest for the call option is at $ 90 and for put

option, it is $ 80. The second highest rate is $ 80 for call option. This denotes that people are

expecting a fall in the stock price and thus making the call option below current spot price of

$ 92.40.

Finally, after doing the fundamental, technical and cash flow and option chain data analysis

we suggest that, chevron corp. stocks should be bought and hold as there is possibilities of

market to go up in near future. And also we suggest doing a put option now at price range of

$ 85-90 for at least 6 months and at most 9 months, to avoid the risk of price fall.

Option Valuation Model with Calculation and Comparison

Option Valuation Model with Calculation

Options Selected For Valuation from the Options Chain Data:

First and Second Highest Open Interest Considered.

Options S.I. Month Release ExpirationTime to

MaturityStrike Last

Open

Int.

Calls

1

May 2008

17th

March

2008

17th May

20082 Month

95 1.5 7451

2 90 4.1 11020

3September

2008

20th

January

2008

20th

September

2008

8 Month

90 7.5 4909

4 100 2.89 9164

5 January

2009

17th June

2007

17th January

200919 Month

80 17.2 19264

6 90 10.7 28363

Puts

7

May 2008

17th

March

2008

17th May

20082 Month

90 1.5 6260

8 85 0.4 18809

9September

2008

20th

January

2008

20th

September

2008

8 Month

80 4.8 8248

10 65 0.4 8282

11 January

2009

17th June

2007

17th January

200919 Month

90 7.1 20923

12 80 3.6 24695

Formula Used for Option Valuation (Non-European Dividend Paying Company):

d(1) = { ln ( S / X ) + ( r - d + 0.5 * σ^2) * t } / (σ * t^0.5)

d(2) = d(1) - σ * t^0.5

Call Option:

C(t) = S * e^(-dt) * N{d(1)} – X * e^(-rt) * N{d(2)}

Put Option:

P(t) = X * e^(-rt) * N{-d(2)} - S * e^(-dt) * N{-d(1)}

Formula Explanation:

C(t) = Value of Call Option’s Premium

S = Underlying Stock Price (Last Closing Price of 21th April 2008)

e = Exponential

d = Dividend Yield

t = Time to Maturity

N = Tabular Value

X = Strike Price

r = Real Risk Free Rate

σ = Standard Deviation of the Options for This Year

P(t) = Value of Put Option’s Premium

Calculation of σ (Standard Deviation)

Adjusted last prices of Jan 1, 2008 to April 21, 2008 considered

Date Adj Close4/21/2008 92.74/18/2008 93.184/17/2008 91.994/16/2008 91.934/15/2008 90.174/14/2008 89.34/11/2008 88.84/10/2008 89.64/9/2008 89.954/8/2008 89.284/7/2008 88.274/4/2008 88.054/3/2008 87.724/2/2008 87.514/1/2008 86.743/31/2008 85.363/28/2008 84.53/27/2008 84.43/26/2008 84.963/25/2008 84.543/24/2008 84.013/20/2008 83.213/19/2008 81.893/18/2008 86.123/17/2008 84.193/14/2008 85.343/13/2008 87.043/12/2008 86.733/11/2008 88.163/10/2008 84.733/7/2008 85.263/6/2008 87.83/5/2008 88.793/4/2008 86.733/3/2008 87.22/29/2008 86.662/28/2008 89.022/27/2008 88.222/26/2008 88.12

2/25/2008 87.182/22/2008 85.422/21/2008 84.782/20/2008 86.342/19/2008 84.832/15/2008 83.62/14/2008 82.842/13/2008 82.122/12/2008 80.542/11/2008 79.852/8/2008 78.692/7/2008 78.182/6/2008 76.962/5/2008 79.172/4/2008 81.432/1/2008 81.91/31/2008 82.651/30/2008 82.631/29/2008 82.011/28/2008 82.271/25/2008 81.231/24/2008 83.071/23/2008 80.871/22/2008 80.671/18/2008 82.861/17/2008 82.161/16/2008 85.631/15/2008 87.641/14/2008 90.261/11/2008 90.021/10/2008 91.241/9/2008 91.911/8/2008 90.31/7/2008 91.471/4/2008 92.681/3/2008 93.931/2/2008 92.79

Standard Deviation (σ) 0.03979031

General information of all options:

S = $92.7

d = 2.32% = 0.0232

r = 5% = 0.05

σ = 0.03979031

1.

X = $95

t = 2 Month = 2/12

d(1) = { ln ( S / X ) + ( r - d + 0.5 * σ^2) * t } / (σ * t^0.5)

= { ln ( 92.7 / 95 ) + (0.05 – 0.0232 + 0.5 * 0.03979031^2) * (2/12)}/{0.03979031 * (2/12)^0.5 }

= (-0.024508419 + 0.004598605) / 0.016244326

= -1.2256

d(2) = d(1) - σ * t^0.5

= -1.2256 - 0.03979031 * (2/12)^0.5

= -1.2418

C(t) = S * e^(-dt) * N{d(1)} – X * e^(-rt) * N{d(2)}

= 92.7 * e^{-0.0232 * (2/12)} * N(-1.2256) – 95 * e^{-0.05*(2/12)} * N(-1.2418)

= 92.34225209 * 0.110136 – 94.2116228 * 0.107158

= 0.074676557

2.

X = $90t = 2 Month = 2/12

D1 =

ln (92.7/90) + [(0.05-0.0232+(0.5*0.001583)]*2/12

0.03979 * (2/12)

D1 =

D1 = 2.1047

D2 = D1 - t

= 2.1047 – 0.016244 = 2.0885

N(D1) = N(2.1047) = N(2.10) + 0.47[N(2.11) - N(2.10)]

= 0.9821 + 0.47 (0.9826 - 0.9821)

= 0.9823

N(D2) = N(2.0885) = N(2.08) + 0.85[N(2.09) – N2.08)]

= 0.9812 + 0.85(0.9817 – 0.9812)

N(D2) = 0.9816

(Ct) = (92.7* e-(0.0232)2/12 *0.9823) – (90* e-(0.05)2/12 *0.9816)

= 90.71 – 87.61 = $3.1

3.

X = 90

t = 8 Month = 8/12

d(1) = { ln ( S / X ) + ( r - d + 0.5 * σ^2) * t } / (σ * t^0.5)

{ln (92.7 / 90) + (0.05 - 0.0232 + 0.5 * 0.03979031^2) * (8/12)} / {0.03979031 * (8/12)^0.5}

= (0.029558802 + 0.018394422) / 0.032488652

= 1.4760

0.0296 + 0.00459

0.016244

d(2) = d(1) - σ * t^0.5

= 1.4760 - 0.03979031 * (8/12)^0.5

1.4435

C(t) = S * e^(-dt) * N{d(1)} – X * e^(-rt) * N{d(2)}

= 92.7 * e^{-0.0232 * (8/12)} * N(1.4760) - 90 * e^{-0.05 * (8/12)} * N(1.4435)

= 91.2772708 * 0.93004 – 87.04944904 * 0.92559

= 4.319413398

4.

X = $100

t = 8 Month = 8/12

D1 =

D1 =

D1 = -1.7662

D2 = -1.7662 – [0.03979*(8/12)] = - 1.7987

N(D1) = N(-1.7662) = N(-1.76) – 0.62[N(-1.76) - N(-1.77)]

= 0.0392 – 0.62[0.0392 – 0.0384] = 0.0387

N(D2) = N(-1.7987) = N(-1.79) – 0.87[N(-1.79) – N(-1.80)]

= 0.0367 – 0.87*[0.0367 – 0.0359] = 0.0360

C(t) = (92.7* e-(0.0232)8/12 *0.0387) – (100* e-(0.05)8/12 *0.0360)

ln (92.7/100) + [(0.05-0.0232+(0.5*0.001583)]*8/12

0.03979 * (8/12)

-0.0758 + 0.0184

0.0325

= 3.53 – 3.48 = $0.05

5.

X = $80

t = 19 Month = 19/12

d(1) = { ln ( S / X ) + ( r - d + 0.5 * σ^2) * t } / (σ * t^0.5)

= {ln (92.7 / 80) + (0.05 – 0.0232 + 0.5 * 0.03979031^2) * (19/12)} / {0.03979031 * (19/12)^0.5}

= (0.147341837 + 0.043686754) / 0.050068375

= 3.8153

d(2) = d(1) - σ * t^0.5

= 3.8153 - 0.03979031 * (19/12)^0.5

= 3.7652

C(t) = S * e^(-dt) * N{d(1)} – X * e^(-rt) * N{d(2)}

N3.81+0.53[n3.82-n3.81]

92.7 * e^{-0.0232 * (19/12)} * N(3.8153 - 80 * e^{-0.05*(19/12)} * N(3.7652)

= 89.356603 * 0.9999– 73.91087445 * 0.9999

= 15.44572855

6.

X = $90

t = 19 Month = 19/12

D1 =

ln (92.7/90) + [(0.05-0.0232+(0.5*0.001583)]*19/12

0.03979 * (19/12)

0.0296 + 0.0437

0.0501

D1 =

D1 = 1.4631

D2 = 1.4631 – (0.03979*(19/12)) = 1.4130

N(D1) = N(1.4631) = N(1.46) + 0.31[N(1.47) – N(1.46)] = 0.9279 + 0.31[0.9292-0.9279]

= 0.9283

N(D2) = N(1.4130) = N(1.41) + 0.30[N(1.42)-N(1.41)] = 0.9207 + 0.30[0.9222-0.9207]

= 0.9212

(Ct) = (92.7* e-(0.0232)19/12 *0.9283) – (90* e-(0.05)19/12 *0.9212)

= 82.95 – 76.59 = $6.36

7.

X = 90

t =2 Month = 2/12

d(1) = { ln ( S / X ) + ( r - d + 0.5 * σ^2) * t } / (σ * t^0.5)

{ ln (92.7 / 90) + (0.05 - 0.0232 + 0.5 * 0.03979031^2) * (2/12)} / {0.03979031 * (2/12)^0.5}

= (0.029558802 + 0.004598605) / 0.015473875

= 2.2074

d(2) = d(1) - σ * t^0.5

= 2.2074 - 0.03979031 * (2/12)^0.5

= 2.1911

P(t) = X * e^(-rt) * N{-d(2)} - S * e^(-dt) * N{-d(1)}

= 90 * e^{-0.05 * (2/12)} * N(-2.1911) - 92.7 * e^{-0.0232 * (2/12)} * N(-2.2074)N(2.20)-0.74(n20-n21)

= 89.25311634 * 0.014256 – 92.34225209 * 0.013678

= 0.009335102

8.

X = $85

t = 2 Months = 2/12

D1 =

D1 =

D1 = 5.6357

D2 = 5.6357 – 0.0162 = 5.6195

Value is not available in the table for N (x).

9.

X = $80

t = 8 Month = 8/12

d(1) = { ln ( S / X ) + ( r - d + 0.5 * σ^2) * t } / (σ * t^0.5)

= { ln (92.7 / 80) + (0.05 – 0.0232 + 0.5 * 0.03979031^2) * (8/12)} / {0.03979031 * (8/12)^0.5}

= (0.147341837 + 0.01839442) / 0.032488652

Ln (92.7/85) + [(0.05-0.0232+(0.5*0.001583)]*2/12

0.03979 * (2/12)

0.0867 + 0.0045986

0.0162

= 4.1652

d(2) = d(1) - σ * t^0.5

= 4.1652 – 0.032488652 * (8/12)^0.5

= 4.1386

P(t) = X * e^(-rt) * N{-d(2)} - S * e^(-dt) * N{-d(1)}

= 80 * e^{-0.05 * (8/12)} * N(-4.1386) – 92.7 * e^{-0.0232 * (8/12)} * N(-4.1652)

= 80 * e^{-0.05 * (8/12)} * 0 - 92.7 * e^{-0.0232 * (8/12)} * 0

= 0

10.

X = $65

t = 8 Month = 8/12

D1 =

D1 =

= 11.4862

Value is not available in the table for N (x).

11.

X = $90

t = 19 Month = 19/12

d(1) = { ln ( S / X ) + ( r - d + 0.5 * σ^2) * t } / (σ * t^0.5)

= {ln (92.7 / 90) + (0.05 – 0.0232 * 0.03979031^2) * (19/12)} / {0.03979031 * (19/12)^0.5}

Ln (92.7/65) + [(0.05-0.0232+(0.5*0.001583)]*8/12

0.03979 * (8/12)

0.3549 + 0.0184

0.0325

= (0.029558802 + 0.079108507) / 0.050068375

= 2.1730

d(2) = d(1) - σ * t^0.5

= 2.1730 - 0.03979031 * (19/12)^0.5

= 2.1229

P(t) = X * e^(-rt) * N{-d(2)} - S * e^(-dt) * N{-d(1)}

= 90* e^{-0.05 * (19/12)} * N(-2.1229) - 92.7 * e^{-0.0232 * (19/12)} * N(-2.1730)

N2.17-0.3[n2.17-n2.18]

= 83.14973376 * 0.016884 – 89.356603 * 0.01488

= 0.074273852

12.

X = $80

t = 19 Months = 19/12

D1 =

D1 =

D1 = 3.8132

Ln (92.7/80) + [(0.05-0.0232+(0.5*0.001583)]*19/12

0.03979 * (19/12)

0.1473 + 0.0437

0.0501

D2 = 3.8132 – 0.0501 = 3.7631

N(-D1) = N(-3.8132) = N(-3.81) - 0.32[N(-3.81) – N(-3.82)] = 0.0001 + 0.32[0.0001-0.0001]

= 0.0001

N(-D2) = N(-3.7631) = N(-3.76) - 0.31[N(-3.76) – N(-3.77)] = 0.0001 - 0.31[0.0001-0.0001]

= 0.0001

(Pt) = (80* e-(0.05)19/12 *0.0001) – (92.7* e-(0.0232)19/12 *0.0001) = 0.007391 – 0.008936

= -0.001545

Valuation Comparison

S.I Open Int. Last Actual Value Comparison

1. 7451 1.5 0.07 Overvalued

2. 11020 4.1 3.1 Overvalued

3. 4909 7.5 4.32 Overvalued

4. 9164 2.89 0.05 Overvalued

5. 19264 17.2 15.45 Overvalued

6. 28363 10.7 6.36 Overvalued

7. 6260 1.5 0.01 Overvalued

8. 18809 0.4 0 Overvalued



11. 20923 7.1 0.074 Overvalued

12. 24695 3.6 -0.002 Overvalued

Current and Future Stock Chart

Current Stock Chart

Future Stock Chart

Call Option

0

20

40

60

80

100

120

May May Sept. Sept. Jan Jan

Month

Price Series1

Put Option

Recommended Option Strategy

After doing all our analysis and valuation we suggest the "Strap" strategy under current

market circumstances for Chevron Corp. The reasons are,

1. The stock price of chevron is uprising since 2006 with no major depression. Thus we

are suggesting buying two call options at current market price for next 3-6 months.

2. There are some price falls in the chart and a major price fall occurred too recently in

February. So we are suggesting doing a put option at lower price than the market for

next 3-6 months to hedge the risk of price fall.

3. We are suggesting doing both calling and putting option for only 3-6 months and not

more than that, as the market are very uncertain now with recent U.S. recession risk

and inflations in euro zone. Making long term options can be more risky.

010

20304050

607080

90100

May May Sept. Sept. Jan Jan

Month

Price Series1

4. We are not recommending any long term option strategy and recommending short

term strategies. Because, time is required to let the market be stable.

A Financial Overview on Chevron Corporation (2007)

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Transcript of A Financial Overview on Chevron Corporation (2007)