Chevron’s Iraqi Oil and GM’s Renewables
Chevron is in discussions with Iraqi government officials about making a major oil field investment in the country. If the deal is finalized, it could be announced later this week when Iraq’s new prime minister visits the White House.
The oil-and-gas industry has been hit hard by the pandemic, and Chevron has been no exception. Reduced demand has forced large scale layoffs, and the company announced earlier in the year that it planned to cut spending by 20%. Chevron’s willingness to invest in new fields shows their optimism for the future despite a difficult year and growing emphasis on alternative forms of energy.
One company that is starting to focus on alternatives to oil-and-gas is General Motors. There is growing speculation that the automotive giant is planning to spin off its electric-vehicle unit into a new company. Many investors see GM’s traditional business declining as electric vehicles become more popular, so a separate stock would allow the EV unit to capture the excitement that has fueled the rise of companies like Tesla and Nikola.
The stock price was up nearly 8% yesterday amid the speculation. Despite the jump, it is still down 18% on the year, and the company is worth just an eighth of Tesla. The spinoff could create a significant amount of value for the company though. The new EV stock could have a valuation of around $20 billion while the traditional stock would likely retain much of its value. Time will tell whether this move will occur or if this is all just speculation. For now, investors are excited.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.