Chevron Subsidiary Collaborates with Caterpillar on Hydrogen Projects

Chevron U.S.A Inc., a subsidiary of Chevron Corporation (CVX), has inked a strategic collaboration agreement with Caterpillar (CAT) to explore hydrogen as a feasible alternative to traditional fuels. CVX shares fell 0.69% to close at $96.39 on September 8.

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Chevron, through its subsidiaries, specializes in the exploration, development, and production of crude oil and natural gas.

Additionally, Chevron U.S.A and Caterpillar will explore the potential for hydrogen use in prime power. The two will also demonstrate the use of hydrogen to power locomotives and hydrogen fueling infrastructure. Work on the rail demonstration will begin across the U.S. immediately. (See Chevron stock charts on TipRanks)

The collaboration with Caterpillar is part of Chevron’s push to pursue opportunities to create demand for hydrogen-powered products and the technologies needed for their use.

“Our collaboration with Caterpillar is another important step toward advancing a commercially viable hydrogen economy,” said Jeff Gustavson, President of Chevron New Energies.

For Caterpillar, the collaboration underscores its focus on new products and technologies that have the potential to safeguard the environment. Additionally, it affirms the company’s ambitions in supporting a more sustainable world with the removal of carbon emissions.

In August, RBC Capital analyst Biraj Borkhataria reiterated a Hold rating on Chevron and lowered the price target to $130 from $135, implying 34.87% upside potential to current levels. According to the analyst, investors are switching to companies focused on reducing emissions.

“Over the coming years, we expect investors to focus on rate-able reductions in emissions intensity for oil and gas producers, and we believe CVX could screen well on this basis,” Borkhataria said.

Consensus among analysts is a Moderate Buy based on 10 Buys and 4 Holds. The average Chevron price target of $127.92 implies 32.71% upside potential to current levels.