Analysts: Chevron's Key Is Cash Flow

Chevron Corporation's (NYSE: CVX) plans to see sales from its Australian Gorgon gas project commence by the middle of this year is a key element in its plan to improve cash flow.

Credit Suisse's Edward Westlake said this, and deliveries from the company's Australian Wheatstone LNG project, expected in 2016, "are the key projects driving cash flow improvement."

Chevron halted a $5 billion stock buyback program Friday, sending its share down sharply, although they've since recovered.

The company also cut capital spending 13 percent for 2015 and Westlake, who maintained a Hold rating, said the amount could fall to the mid $20-billion range by 2017, from $31 billion currently.

"The bigger they are, the slower they slow," said Morgan Stanley's Evan Calio, who maintained a Neutral rating on Chevron.

The long-term nature of most of Chevron's development projects have "pre-ordained the production outlook for the next three years," Calio said.

Still, the company said Friday it would discontinue efforts to establish a shale gas project in Poland.

UBS' William A. Featherstone forecast a deficit in free cash flow for the company in 2015 of $15 billion, and expects the deficit will persist until 2018.

As a consequence, Featherstone said Chevron's ratio of debt to capitalization will rise, although by not enough to threaten its AA credit rating.

Chevron changed hands recently up 1.8 percent and other major oil companies were also rising.

Earlier Monday, Exxon Mobil Corporation (NYSE: XOM) beat fourth-quarter earnings estimates and trimmed its buyback program by more than half to $1 billion.