During the October 2 episode of Mad Money, a caller asked whether Texas Pacific Land Corporation (NYSE:TPL) was a buy, sell or hold after its performance in 2025 and continued progress this year. Jim Cramer instead directed attention to Chevron Corporation (NYSE:CVX), as he said:
You know, when it comes to oil, I’m being very limited. I say you have to do Chevron because Chevron’s got Venezuela, Chevron’s got the Gulf of Mexico… and it’s got really great Asian properties and it’s terrific in the Permian. So we’re going to stick with that one. I don’t want to have too many going.
Nevertheless, Cramer was quite bullish on TPL during a September episode.
Different Businesses With a Shared Data-Center Project
Texas Pacific Land Corporation earns money from land, mineral royalties, and water-related operations rather than producing oil itself. Its second-quarter revenue reached a record $246.1 million, with net income of $153.9 million and free cash flow of $155.5 million. Royalty production also reached a record 39,700 barrels of oil equivalent per day.
The company has a direct connection with Cramer’s preferred stock. TPL agreed to provide land and brackish water for Chevron Corporation’s Project Kilby development in Reeves County, Texas. Chevron separately disclosed a 20-year agreement to supply a Microsoft data center from a West Texas power facility designed for approximately 2.67 gigawatts of capacity. The companies offer different forms of exposure to the same expansion in electricity demand.
During a September episode, Cramer also commented on Chevron’s agreement with Microsoft.
Chevron’s Production Growth Adds to Higher Oil Prices
Chevron Corporation reported second-quarter adjusted earnings of over $12 billion. Worldwide production increased 20% from a year earlier, supported by legacy Hess assets and growth in the Permian Basin and Gulf of Mexico. The company also reduced total debt by $8.4 billion during the quarter.
Its valuation is substantially below Texas Pacific Land Corporation’s. Chevron trades at approximately 12.4x forward earnings, compared with 34.2x for Texas Pacific Land. The companies are not direct operating peers. TPL’s royalty model differs from Chevron’s production and refining business. Even with that distinction, investors are paying a much higher multiple for TPL’s expected earnings.
Cramer maintained his bullish stance on CVX in a previous episode, and suggested another stock as well for its yield.
Both Remain Exposed to the Commodity Cycle
Texas Pacific Land Corporation’s lack of direct drilling operations does not remove its dependence on energy activity. The company states that revenue is affected by commodity prices and customers’ development decisions. Its unhedged position captured higher oil prices in the latest quarter, but also leaves it exposed when prices fall.
Chevron Corporation’s results likewise benefited from higher commodity prices and refining margins, including $1.4 billion in favorable timing effects. The quarter also showed the other side of geopolitical disruption. International refinery throughput fell 10% because of supply interruptions associated with the Middle East conflict. Strong quarterly profits should not be treated as a fixed earnings base.
TPL Gains Fund Holders but Carries Higher Short Interest
As per Insider Monkey, there were 34 hedge funds holding Texas Pacific Land Corporation in Q2, up from 30 in Q1. Chevron Corporation had 101 holders, compared with 103 previously. Short interest differed more sharply, at 8.96% of TPL’s float versus 1.06% for Chevron. TPL attracted additional fund holders while retaining considerably greater short exposure.
Cramer’s answer favors keeping his oil exposure concentrated in Chevron. TPL still offers a distinct royalty business and opportunities in land and water, including work along with Chevron. But its much higher earnings multiple means investors are paying considerably more for those characteristics, even though both companies remain sensitive to energy prices.
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