Energy Stocks Advance; Chevron Iraq Deal, Mega-Utility Merger

Energy stocks advanced late Thursday afternoon, with the NYSE Energy Sector Index increasing 0.5% even as broader markets declined. Chevron ($CVX) rose 1.24% to close at $183.86, outpacing the sector amid reports the major is slated to sign accords with Iraq for oil field investments. The stock has delivered a 123.4% return over the past five years, though analysts now view shares as closer to fairly valued following the extended run. Tight fuel markets and elevated crack spreads are benefiting refiners, with limited Middle East crude exposure helping cushion supply disruptions for some operators.

Chevron ($CVX) is expected to sign accords with Iraq for oil field investments, expanding its international upstream portfolio. TD Cowen reiterated a Hold rating on $CVX earlier this month and cut the price target to $197 from $205, aligning with adjusted targets across the oil majors space. Renaissance Technologies counts $CVX among top dividend stocks, with expectations around projects linked to higher oil prices and data center power demand supporting the current share price. ExxonMobil ($XOM) appeared on Barron's mid-year dividend 'dogcatcher' picks as a safer high-yield stock with projected gains into 2027. Halliburton ($HAL) secured a long-term contract with Aramco for Saudi Arabia's Jafurah gas project, expanding its Saudi footprint with advanced fracturing technologies.

Valero Energy ($VLO) declared a regular quarterly cash dividend of $1.20 per share on common stock, payable August 31 to stockholders of record as of July 31. The company's board also authorized an additional $5B share repurchase program, reflecting confidence in cash generation amid tight fuel markets. Phillips 66 ($PSX) benefits from tight fuel markets and elevated crack spreads that boost refining margins, while limited Middle East crude exposure helps cushion disruptions. Analysts view the refining segment as well-positioned given current supply-demand dynamics in fuel products.

NextEra Energy ($NEE) and Dominion Energy filed regulatory applications for a proposed merger that would create the largest regulated electric utility in the U.S., serving about 10 million customer accounts across four southeastern states. The merger plan includes $2.25 billion in bill credits for Dominion customers as part of the proposal. Southern Co. ($SO) advanced 1.55% to $96.07 while markets declined, with policymakers and business leaders highlighting how America's next phase of economic growth will depend on whether the U.S. can outcompete rivals in AI, energy and advanced manufacturing. JP Morgan maintains a Neutral rating on $SO and raised the price target to $104 from $101. Duke Energy ($DUK) is scheduled to report second-quarter results next month, with analysts expecting single-digit earnings growth.

First Solar ($FSLR) appears undervalued after a recent pullback, backed by strong fundamentals and energy security tailwinds according to analysts. The company is cited among cash-heavy stocks with solid balance sheets, though some firms in that category avoid debt due to weak business models or limited expansion opportunities. NextEra Energy ($NEE) is expanding its battery storage portfolio to support grid reliability, renewable integration and long-term growth amid rising electricity demand driven by data centers and AI infrastructure. Capital investments in nuclear, solar, storage and gas assets across the utility sector could support grid reliability and long-term earnings growth as power demand accelerates.