Chevron is looking to become a very different energy company, the company's CEO told Jim Cramer recently.
In an "Executive Decision" segment on a recent 'Mad Money" episode, Jim Cramer sat down with Mike Wirth, chairman and CEO of Chevron (CVX) - Get Chevron Corporation Report, on the heels of the company's investor day where they laid out Chevron's sustainability mission and goals. (Find out more about how you can profit from investment ideas on Real Money here.)
Wirth said that Chevron is a very different energy company today than when he joined 40 years ago. But Chevron is listening to shareholders that are demanding more environmental responsibility and increases in sustainability. That's why Chevron has tripled its commitment to invest in faster-growing, lower-carbon energy sources.
You won't see Chevron investing in wind or solar, however, because those areas are maturing. Instead, Chevron is investing in green hydrogen and green natural gas from dairies and landfills. The company has already partnered in a utility-scale green hydrogen project in Utah that will supply electricity to California, for example.
Chevron now has a dual strategy. It aims to continue being a leader in a diverse energy environment while still creating value and returns for its shareholders. There are many markets where electrification doesn't make sense, Wirth told Cramer, and those are places where Chevron can add real value.
As for creating shareholder value, Wirth said Chevron has always been disciplined with its capital allocation and these new investments will be no different.
Also on the oil front, Royal Dutch Shell (RDS.B) - Get Royal Dutch Shell Plc Sponsored ADR Class B Report signed an agreement to sell its Permian basin assets to ConocoPhillips (COP) - Get ConocoPhillips Report for $9.5 billion cash. Cramer has noted in the past that oil companies aren’t going gung-ho in the Permian, even though oil is over $70, because they’re trying to move toward cleaner energy.