CVX: Model update

Research evidence excerpt

CVX: Model update

Chevron Corporation

Target/Upside/Downside Scenarios Investment summary

Our positive view on CVX is underpinned by our beliefChevron Corporation

that while the commodity complex is likely to remain

260 125 Weeks 15FEB24 - 07JUL26 volatile, CVX's upstream heavy weighting along with

240 its strong balance sheet and commitment to remaining

220 TARGETTARGET 220.00220.00 disciplined through organic and inorganic activity should 200

180 CURRENTCURRENT 174.01174.01 prove defensive over time.

140 Key reasons to be positive: 120

80 • Conservatism helping drive the right decisions. CVX has

100m typically been conservative when managing its balance

50m sheet and shareholder returns. This conservatism allowed

2024 2025 2026 the company to maintain its dividend during recent

F M A M J J A S O N D J F M A M J J A S O N D J F M

A M J J downturns, while also making it the only Super-Major to CVX US Rel. S&P 500 COMPOSITE MA 40 weeks

Source: Bloomberg and RBC Capital Markets estimates for Target have executed accretive M&A consistently in recent years.

• M&A helps add depth to upstream portfolio. CVX hasValuation

effectively used its premium multiple to acquire companiesWe value Chevron based on a 2027E EV/DACF multiple of

in recent years, with the PDCE acquisition being another10x for its core business adjusted for debt. We use a higher

example of this - purchasing a company trading at amultiple for CVX than peers, reflecting the defensiveness of its

materially higher FCF yield, driving accretion across keybusiness model and strategic certainty. This leads to a price

metrics. With the Hess acquisition now also closed, thistarget of $220, which supports our Outperform rating.

removes some of the longer-term concerns with the CVX