Should You Buy Chevron Stock With Oil Prices Below $70 a Barrel?

Core Viewpoint - Crude oil prices have decreased this year, with Brent down about 10% and just below $70 a barrel, impacting cash flow for oil companies like Chevron. However, it is still considered a good time to invest in Chevron shares due to its strong fundamentals and future growth prospects [1]. Group 1: Financial Performance - Chevron has a resilient oil and gas portfolio with a breakeven level of about $30 per barrel, allowing it to generate strong cash flow at current prices in the high $60s [3]. - In the second quarter, Chevron generated over $8 billion in cash flow from operations and nearly $5 billion in free cash flow, with an average realized Brent price of $67.88 per barrel. This enabled the company to invest in its business and return over $5 billion to shareholders [4]. - The company ended the second quarter with a net leverage ratio of less than 15%, well below its target range of 20%-25%, providing financial capacity to invest and return cash during weaker oil markets [5]. Group 2: Future Growth Prospects - Chevron expects to increase cash flow in the future, having completed major capital projects in Kazakhstan and the Gulf of Mexico, which will contribute to rising free cash flow [6]. - The company has achieved a milestone of producing over 1 million barrels of oil equivalent (BOE) per day in the Permian Basin, which will further enhance free cash flow in the coming years [6]. - Chevron aims to deliver $2 billion to $3 billion in structural cost savings by the end of next year, expecting its legacy portfolio to generate $10 billion in incremental annual free cash flow at a $70 Brent price [7].