Chevron Is Ready to Grow Its Power Plant Business

Chevron power plants could give investors a new reason to buy the stock at a time when data centers are the hottest theme in energy. A Chevron gas station in San Francisco. (Jason Henry/Bloomberg)

Key Points

• Chevron plans to deploy power plants for West Texas data centers by 2027, aiming for multiple gigawatts of capacity by 2030.
• Chevron is collaborating with GE Vernova and Engine No. 1, in talks with a data center company for a final investment decision early next year.
• Chevron projects $18 billion to $21 billion in annual capital expenses through 2030 and plans $10 billion to $20 billion in yearly stock buybacks.

Chevron expects to start deploying power plants to feed data centers in West Texas by 2027, the company said in a presentation for an investor day on Wednesday. Its power plant business—a major expansion of Chevron’s electricity operations—could have multiple gigawatts of capacity by 2030, the company said in its presentation.

Chevron is working with GE Vernova and investment firm Engine No. 1 on the operation. They are in exclusive talks with a data center company, and plans to make a final investment decision early next year.

The electricity operations—first disclosed in January —are a sideline to Chevron’s main business of producing and refining oil, and drilling for natural gas. But they could give investors a new reason to buy the stock at a time when data centers are the hottest theme in energy.

Beyond the power plant business, Chevron’s investor presentation emphasizes its desire to boost cash flow, even as its production grows more slowly through 2030. The company says it can comfortably pay its dividend and capital expenses even if oil falls below $50. And it plans to buy back $10 billion to $20 billion in stock a year assuming oil is between $60 and $80 per barrel.

Chevron is keeping its capital expenses in check, projecting $18 billion to $21 billion in capital costs a year through 2030. The midpoint of that range would represent a slight decline from its current rate, after taking into account its acquisition of Hess. Exxon Mobil, by comparison, is spending more heavily on expansion.

The investor day will be streamed on Chevron’s website starting at 9:30 a.m.

Write to Avi Salzman at avi.salzman@barrons.com