Chevron is my diamond in the energy coal mine

Arabian Post

23-05-2025

Matein Khalid
While I never ​ever found diamonds in any coal mine, the truth is​ I never looked since I never really believed that De Beers/James Bond propaganda that diamonds are forever. In fact, my ​i​ndustry sixth sense​ tells me that diamonds are forever – worthless. I guess, my only investment in diamonds was a romantic one when I proposed to my then GF and now proud mother of my twins​. Unlike J Lo, she never raps to me​: 'look at the rock I got/am still​, am still Farah from the block​'.
​Any business where dealers skim ​200% retail margins only proves the existential truth that P.T. Barnum once articulated with such poetic magnificence: there is a sucker born every minute and billions can be made by those who know how to get money from millions of suckers as the founder of any cult in South Asia or East of Suez will attest. After all, my Mickey Mouse is stronger than your Minnie Mouse, ​Achtung baby!
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On Wall Street, this principle means finding a fabulous business in a sad sack sector. Take energy, a pitiful 3% on the index now but a tragedy for a guy who learnt how to value oil and gas takeover targets from Texan wildcatter​ T. Boone Pickens' greenmail deals. When I asked my hero if he would ever consider buying energy stocks in the Mid​east, he replied, no. I only drill for 50 cents to the dollar-oil on the NYSE, not sniff for the black goo in Arabia like Getty or ​the Rockerfellers.
Prince Abdulaziz has triggered a price war in Brent crude and even Goldman now publicly voices that $40 oil is possible. Yet Prince AA​BS​'s last price war in 2020 enabled me to hit 5X paydirt in OXY, so I view the glass as not only half full but a champion flute full of imaginary Dom Pérignon bubbly when the light finally emerges at the end of a long dark tunnel. My fave energy puppies?
Chevron will forever be ​my Socal, whose geologists found and drilled the ​elephant ​gusher Dammam VII in a Saudi salt dome that changed the history of Arabia forever and enabled my 5-star ​Daddy funded misspent youth in Dubai, Philly, ​the Village, London and the playground cities of Europe. At 134, America's second largest supermajor after Exxon is too cheap to ignore for me relative to some of the ritziest assets in Big Oil. So to butcher Dan Yergin and the civil rights anthem from the Sixties, I keep my eyes on the Prize, Oh Lord!
The div is now almost 5% and it is finger lickin good​/100% safe. EPS will bottom in 2025 and sizzle till 2028 since my baby has the best production growth profile and reserve replacement ratio among the Seven Sisters or Sette​ Sorelle as ENI's Enrico Mattei called the corporate colossi of Big Oil before he, like Total's chairma​n, in a Moscow snowstorm, was silenced forever by a plane crash. The val is now at a juicy 14 year discount to its last decade average. History, like Shakira's hips, doesn't l​ie, unlike government sanctioned historians and jingo ​Johnny Joker newswalah​s.
Chevron's cash hoard makes CEO Mike Wirth a natural predator to drill 50 cents​ ​to the dollar oil on the NYSE when the Saudis ignite a price war, like Uncle Boon of Mesa ​and Amarillo​ Tex. It has midstream/downstream assets in every major oil province on earth. CVX at 130 prices a global recession that will not happen as the central banks do their own money printing Charge of the Light Brigade and Mike is no poor Lord Cardigan at Balaclava.
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CVX now produces 1.2 MBD in the Permian Basin. It generates 35% of Venezuela's GDP. It will be the top partner to NIOC after post sanctions Iran reopens to the world and DonnyT, the saviour of the Persian Civilization. It will generate $22 billion in free cash flow even at Brent 58. The Khazak joint venture is now upstream, the Umm Gusher of the Caspian and the real cause of the price war. The LNG dragons in Australia and the Hess prize in Guyana are both money gushers.
Chevron is now my diamond in the coal mine, though do not expect any overnight zero to hero magic wand here. If I am right, CVX will print 200 bucks next year. When puppies reflect worst case scenarios, I drill for black gold on the NYSE.
Also published on Medium.
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