Is Chevron's Lithium Entry a Game-Changer for Its Portfolio?

Chevron Corporation (CVX) has taken a bold step into the lithium sector, acquiring roughly 125,000 acres in the Smackover Formation across Texas and Arkansas. Long known for its oil history, this region is now emerging as one of North America’s most promising lithium sources. For Chevron, it marks the company’s first official move into commercial lithium production — an area critical to electric vehicle battery manufacturing and the broader energy transition.

To develop the acreage, Chevron plans to deploy Direct Lithium Extraction (DLE), a process designed to be faster, more efficient, and less environmentally disruptive than conventional mining. The approach fits well with Chevron’s expertise in subsurface operations, reservoir management, and fluid handling. By adapting these core strengths, the company is positioning itself to tap into the rising demand for domestically sourced battery materials at a time when the United States is working to secure its mineral supply chains against global uncertainty.

What makes this move stand out is Chevron’s intent to scale lithium into a real business rather than treat it as a side bet. The acquisition signals a commitment to diversifying its portfolio while reinforcing U.S. energy independence. By blending operational know-how with emerging technology, Chevron aims to play a central role in supplying the lithium needed to power electrification. This first step into Smackover sets the foundation for a long-term presence in critical minerals.

Energy Giants Pivot to Lithium Leadership

ExxonMobil (XOM) is positioning itself as a frontrunner in the lithium space. In 2023, it secured 120,000 acres in the Smackover Formation, underlining its early commitment to this key mineral. The company aims to tap its underground expertise and DLE technology to deliver lithium output sufficient for over a million EVs annually by 2030. With supply deals already in place — including one with South Korea’s LG Chem — ExxonMobil is building a commercial facility in Arkansas, targeting initial production by 2027.

Occidental Petroleum (OXY), through TerraLithium, is also advancing aggressively in the lithium race. With holdings in Arkansas and a partnership with Berkshire Hathaway in California’s Salton Sea region, Occidental is pursuing extraction through proprietary DLE methods. The focus is not only on scaling lithium output but also on ensuring a low-carbon production footprint. This strategy aligns closely with Occidental Petroleum’s broader decarbonization agenda, positioning lithium as a natural extension of its long-term energy transition plans.

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This article originally published on Zacks Investment Research (zacks.com).

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