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Jim Cramer Talks With Chevron CEO Mike Wirth

Oil major is in strong uptrend, as management prepares for lower carbon future.

With gas prices high and Chevron  (CVX) - Get Chevron Corporation Report, stock and profits climbing, Mike Wirth, chairman and CEO recently spoke with Jim Cramer on the Mad Money TV show.

Wirth sought to focus on the company’s efforts to become more environmentally friendly. Wirth told Cramer the company understands the future is lower carbon and is committed to delivering strong returns for shareholders while also preparing for that lower carbon future.

Lower emissions will come from many places, Wirth added. Wirth told Cramer Chevron has already made substantial reductions in the flaring of natural gas as well as in the efficiency of everything the company undertakes.

Real Money’s Bruce Kamich recently revisited Chevron’s charts. “It's nice when the fundamentals follow the charts,” Kamich wrote, adding that investors can “stay long CVX from the $102.50 area. Raise stops to $101 from $94. Our price targets are $136 and then the $159 area.”

Many energy producers flare natural gas when transportation infrastructure is not in place to move the gas to the market. While this allows oil to be produced, it also allows a valuable energy source to be lost and produces carbon dioxide and other greenhouse gas emissions.

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Flaring is a frequently discussed social and environmental issue in the Permian Basin, where Chevron has operated for approximately 100 years.

Chevron’s approach to unconventional development in the Permian Basin has resulted in industry leading environmental performance. According to Rystad Energy, 40 of the largest gas producers in the basin in 2019 averaged 6.1 percent flare share of production, while Chevron's Permian operations flared at just 1.07 percent.

Additionally, Chevron is investing in new technologies. The company is working with dairy farmers, for example, to capture and process methane and convert it into clean, compressed natural gas. Dairy farmers are using their barns as power plants in order to mitigate the release of gasses that contribute to global warming.

When asked about aviation fuels, Wirth said that batteries lack the energy density needed for aviation, which is why they're working on sustainable aviation fuels that can bridge the gap until even better technologies can be developed. Chevron made headlines recently by committing to helping develop and buy ethanol-based jet fuel.

Chevron is favored by some investors because of its high dividend yields, recently a 4.6% dividend yield. Strong dividends are seen by many as a hedge against inflation. Wherever Chevron can provide value, the company will be there, Wirth concluded.

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