Strategic analysis of chevron

Athanasios Pitatzis, Nikolaos D.Ntintas,

Stelios Veisakis, Aikaterini Souvatzoglou,

Evangelia Margoni

MSc Oil and Gas Technology

Eastern Macedonia and Thrace Institute of

Technology

School of Engineering Technology

Department of Petroleum & Natural Gas

Technology

Strategic Analysis of Chevron

Presentation’s Contents

• Chevron history and basic information

• Financial Data of Chevron Upstream and

Downstream Sector

• SWOT Analysis of Upstream-Downstream

• CPM, Grand Strategy and IE Matrix

• Proposed alternative strategies

About Chevron

• Second-largest integrated energy company headquartered

in the United States

• They involved in oil, gas, and geothermal energy industries,

including:

– Exploration and production;

– Refining, marketing and transport;

– Chemicals manufacturing and sales

– Power generation

• Sales and other operating revenues – $220 billion, Net

Income $21 billion

• 64,500 employees, including more than 3,200 service

station employees

Vision and Mission of

Chevron

• At the heart of The Chevron Way is our vision…to be the global energy company most admired for its people, partnership and performance.

• Mission of Chevron: Our company’s foundation is built on

our values, which distinguish us and guide our actions. We

conduct our business in a socially responsible and ethical

manner. We respect the law, support universal human

rights, protect the environment and benefit the communities

where we work.

Financial Map of Chevron

Upstream Segment Earnings

20$ billions

Upstream Segment

Assets 180$ billions

Upstream Revenues

75$ billions

Downstream Segment

Earnings 2$ billions

Downstream Segment

Assets 231$ billions

Downstream Revenues

195$ billions

91%

9%

Segment Earnings

Upstream Downstream

29%

71%

Segment Sales and Operational Revenues

Upstream Downstream

SWOT Analysis of Upstream

• Strengths:• Massive Oil Reserves in comparison with other competitors

(11 billion barrels)

• Access to unstable areas to produce oil and gas such us

Kurdistan of Iraq and Nigeria

• Geopolitical player, more specific geoenergy player

• World’s largest holder of deep water(area

of continued growth) acreage in Gulf of

Mexico and Nigeria

Chevron Upstream Assets

Weaknesses

• Cost of environmental hazards

• Legal Issues

Oil Spill in Brazil from Chevron Rig

Opportunities

• Focus on development of shale gas wells in

China, USA, Mexico and Argentina the first four

countries which have the biggest shale gas

reserves

• Merge and acquisitions with National Oil

Companies

• Discovered enormous oil and gas field all around

the world

• Technology R&D innovation in the field of

exploration of methane hydrates

• Strategic alliance with JOGMEC (Japan Oil, Gas

and Metals National Corporation) and Baker

Hughes

Threats

• Government environmental and taxation

legislation

• Cost of production and exploration of oil and gas

wells

• Low global economic growth

• High competition

• Geopolitically instability

• Over Debt countries globally

SWOT Analysis of Chevron

Downstream Sector• Strengths:• Well placed in Asia- Pacific area because

Chevron owns 12 refineries and 1 chemical

factory in this area

• Marketing network supports retail outlet on 6

continents

• The company ranked 1th in 2012 on the Refinery

Utilization among all of the competitors (refinery

capacity)

• Chevron chemistry sector, such as Chevron

Phillips and Chevron Oronite

Weaknesses

• Cost of environmental hazards, due to gas flaring

from refinery activities and dangerous accidents in

Chevron refineries such as explosions

• Legal issues

• Decreasing in US and International Refined

Product Sales

• Decreasing in Worldwide Downstream Earnings

Opportunities

• Decreasing oil prices, reduce the cost per barrel

for the refineries

• Expand our refinery portfolio near to

unconventional resources, such as shale gas and

methane hydrates.

• Focus on development of the refineries in Asia-

Pacific

• Strategic alliance with major National Oil

Companies in Asia-Pacific area which owns a lot

of refinery assets in the area

• Customer trends for more friendly and clean fuels

Threats

• Security issues. Such as terrorist attacks or

asymmetric threats

• Geopolitical instability

• Government Environmental and Taxation

Legislation

• Increase of natural gas share in global energy mix

• National Oil Companies, political influence and

ownership of the global oil reserves

• Low global economic growth

CPM Matrix for Chevron Critical success factors Chevron Exxon Mobil Shell

weight Rating Score Rating Score rating score

Advertising 0.20 3 0.60 3 0.60 3 0.60

Product quality 0.10 3 0.30 4 0.40 2 0.20

Management 0.07 4 0.28 3 0.21 3 0.21

Financial position 0.10 3 0.30 2 0.20 3 0.30

Customer loyalty 0.05 2 0.10 3 0.15 3 0.15

Global expansion 0.20 3 0.60 4 0.80 4 0.80

Market share 0.09 3 0.27 3 0.27 4 0.36

Geopolitical Influence 0.15 3 0.45 3 0.45 3 0.45

Production capacity 0.04 3 0.12 3 0.12 4 0.16

Total 1.00 3.02 3.20 3.23

Grand Strategy Matrix for

Chevron

• Chevron has 8% annual growth the last 4 years since 2009

and chevron CPM evaluation score is 3.02. According to

these statistics chevron is located in Quadrant 1.

The Internal-External Matrix

for Downstream and

Upstream Chevron Sector

• IFE Score of downstream is 3.11 and the EFE Score is 3.03.

The downstream earnings represent the 9% of total

segment earnings.

• IFE Score of upstream is 2.83 and the EFE Score

is 2.64. The upstream earnings represent the 90%

of total segment earnings

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Conclusions and Proposed

StrategiesDownstream:

• Influence local communities, develop a stable

environment and create long-term sustainability

• Penetration in lubricant and petrochemicals

sector

• Invest in downstream sector by supporting and

advertising the brand name in the EU countries

• Forward integration in refinery sector with

introduction of new technological advantages

Upstream:

• Opportunity to penetrate in the Chinese gas

upstream industry

• Exploration and Production of methane hydrates

• Cooperation with geopolitical institutions such as

Stratfor and The Global Policy Institute (London

Metropolitan University)

Thank you for your

attention• Any Questions?