What to Look for From Chevron Corporation (CVX) This Earnings Season

The troubles at Exxon Mobil Corporation (NYSE:XOM) should be a reminder to energy investors that cost-effectively growing production after the age of easy oil will be no simple task. By doubling-down in political risky countries, it may be a sign of desperation on Chevron’s part.

(4) Liquefied Natural Gas

Chevron has made liquefied natural gas, or LNG, a linchpin of its expansion strategy. Chevron’s CEO John Watson sees rising demand from Asia exceeding LNG supplies by the end of the decade.

Chevron is well positioned for this development and the company has been making lots of progress on its LNG business. In June, Chevron announced the first LNG shipment from its $10 billion Angola facility. The company also expects to start exporting natural gas from its Australian Gorgon and Wheatstone projects by 2015 and 2016 respectively. Investors should be listening for progress reports in upcoming quarters as those deadlines approach.

Catalysts

(5) Dividends and buybacks

Chevron will be entering into a period of robust free cash flow generation by 2014 as the company begins to reap the rewards of its heavy investment program over the past five years. This has many analysts wondering if a big round of dividend hikes and share buybacks are in store.

In Chevron’s conference call last quarter, CFO Patricia Yarrington said any change to the dividend or share buyback program would depend on the company’s project queue at the time. But given that Chevron is expected to generate $50 billion in cash by 2017 (up more than $10 billion from 2012), will the company really be able to find a productive use for all that money? A big capital return program would be a massive catalyst for the stock.

Foolish bottom line

We’re now prepared to make our own assessment of Chevron’s quarterly release and what to listen for on the conference call. Being well-informed ahead of the announcement is critical whether you’re a prospective or current shareholder. Now bring on that earnings report!

Robert Baillieul has no position in any stocks mentioned. The Motley Fool recommends Chevron. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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