U.S. energy major Chevron Corporation (CVX) announced that its subsidiary U.S.A. Inc. has started commercial production from a $1.4 billion facility at its Pascagoula, MS refinery. The newly built manufacturing plant will add to Chevron’s premium base oil production capacity, thereby making it the largest producer in the world.
The company already produces premium base oil – used to make motor oil for vehicles as well as lubricants and grease for equipment – at its refineries in Richmond, CA and Yeosu, Korea. The production from the 25,000 barrels per day facility at the Pascagoula refinery will nearly double the company’s present capacity.
Premium base oils from the Pascagoula refinery will serve the needs of customers in the U.S. East, Europe and Latin America. The Yeosu refinery will continue supplying customers in Asia and the Richmond refinery will serve customers in Asia as well the U.S. West.
Management at Chevron expects the lubricants business to be a high growth driver and this new capacity addition to improve the company’s reputation as a global oil supplier.
San Ramon, CA-based Chevron is one of the major publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses.
Earlier in the month, Chevron issued a second-quarter 2014 interim update covering the first two months of the quarter. The company expects earnings to increase sequentially. This quarterly growth is attributable to gains from asset sales (mainly upstream-related assets) and an absence of impairment charges. However, foreign exchange losses are expected to widen from the first-quarter level.
Chevron is expected to report second-quarter earnings on Aug 1 and the Zacks Consensus Estimate for the quarter is currently pegged at $2.73 per share.
Currently, Chevron has a Zacks Rank #3 (Hold). Meanwhile, one can consider better-ranked players from the integrated oil space like Sasol Ltd. (SSL), Statoil ASA (STO) and Exxon Mobil Corporation (XOM). While Sasol and Statoil sport a Zacks Rank #1 (Strong Buy), Exxon Mobil has a Zacks Rank #2 (Buy).
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