Microsoft: The First Twenty-Year CustomerNarrow moat
Chevron (CVX) — moat facet
Chevron's first named long-term customer is a Microsoft data centre that will burn Permian gas Chevron now sells for 91 cents.
Chevron's most interesting customer relationship is not for oil. In the second quarter of 2026 it "Signed an agreement to develop a power facility in West Texas designed to provide approximately 2.67 gigawatts of behind-the-meter dedicated electricity capacity to a Microsoft data center under a 20-year power purchase agreement"1. In the first quarter it had entered exclusivity with Microsoft and Engine No. 1 for the project2.
It is a named customer on a fixed term, which Chevron's commodity business never has. The 10-K describes the plan as its first power project for data centers, to be supplied with gas from the Permian Basin3.
The connection to the Permian is the point. Chevron realised $0.91 per thousand cubic feet for American gas in the second quarter of 20264, the price of gas that comes up with oil in a region short of pipelines. A power plant that burns that gas next to the well turns a near-worthless by-product into electricity sold under a twenty-year contract.
It is also a new business for Chevron, with new risks: construction, the reliability a data centre demands, and a single customer for the output. None of the plant's revenue or cost is disclosed yet.
It is one of several new-energy bets the 10-K lists alongside lithium extraction and enhanced geothermal5, but it is the only one with a named customer and a term.
The Microsoft contract is the test of whether Chevron can sell its gas at a contracted price rather than a local one. The realised American gas price is the before figure; the plant's disclosed revenue once it runs will be the after.
Agreement signed Q2 2026 for 2.67 GW over 20 years.
The price the power contract is meant to escape; a plant that runs without lifting realisations would add capital, not margin.
Source: Chevron Q2 2026 earnings release ↗- ReportedIn the second quarter of 2026 it "Signed an agreement to develop a power facility in West Texas designed to provide approximately 2.67 gigawatts of behind-the-meter dedicated electricity capacity to a Microsoft data center under a 20-year power purchase agreement".Chevron second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - operations: production, refining, realisations, curtailments and business events. — Q2 2026 · publ. 31 July 2026 · source ↗
- ReportedIn the first quarter it had entered exclusivity with Microsoft and Engine No. 1 for the project.Chevron first-quarter 2026 earnings release, Form 8-K exhibit 99.1. — Q1 2026 · publ. 1 May 2026 · source ↗
- ReportedThe 10-K describes the plan as its first power project for data centers, to be supplied with gas from the Permian Basin.Chevron Form 10-K for fiscal 2025 - Items 1 and 2: upstream operations, reserves, concessions and employees. — FY2025 · publ. 24 February 2026 · source ↗
- ReportedChevron realised $0.91 per thousand cubic feet for American gas in the second quarter of 2026, the price of gas that comes up with oil in a region short of pipelines.Chevron second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - operations: production, refining, realisations, curtailments and business events. — Q2 2026 · publ. 31 July 2026 · source ↗
- ReportedIt is one of several new-energy bets the 10-K lists alongside lithium extraction and enhanced geothermal, but it is the only one with a named customer and a term.Chevron Form 10-K for fiscal 2025 - Items 1 and 2: upstream operations, reserves, concessions and employees. — FY2025 · publ. 24 February 2026 · source ↗