Meridian Hedged Equity Fund on Chevron Corp.
Thesis
Chevron remains a large integrated energy company with upstream, refining and chemicals operations and substantial global reserves. Although the stock was pressured by the capital demands of major M&A and execution challenges on large projects, Meridian noted that core profit engines improved as production at assets including TCO and Leviathan returned to full rates. Strong downstream refining economics and the integration of Hess provided additional support, partially offsetting weaker commodity-price benefits.
“Stock performance in the second quarter was pressured by high capital requirements for large-scale M&A activity and operational challenges in executing major projects.”
Key risks
- High capital requirements associated with large-scale M&A activity.
- Operational challenges in executing major projects.
- Reduced commodity-price benefits compared with prior periods.