Chevron's Power Play: Can Oil Majors Thrive Without Oil Prices?
Chevron is trading near its 52-week high, but analysts at 24/7 Wall St. believe the stock can go even higher.
The oil major posted a strong downstream quarter and signed a power deal with Microsoft that management calls a repeatable model independent of oil prices.
The company's 20-year take-or-pay power purchase agreement with Microsoft for 2.67 GW of behind-the-meter capacity in West Texas, known as Project Kilby, is designed to deliver 'mid-teens returns and long duration contracted cash flows that are independent of commodity price cycles.'
Chevron has also achieved record U.S. upstream production of 2,077 MBOED, 97% refinery utilization, Guyana's Hammerhead FID, and Iraq's West Qurna II negotiations.
The bull case for Chevron now hinges less on Brent than on power, but the company still carries commodity risk regardless of the AI narrative. WTI has swung from the $70s in early July to over $97 in September, and a slip back would compress upstream cash flow fast.