Chevron joins rival ExxonMobil in Smackover Foundation lithium play

Nation’s two largest oil companies could trigger billions of new investment in South Arkansas

By Wesley Brown – The nation’s second-largest oil conglomerate is joining Big Oil rival ExxonMobil Corp. in making plans to invest and develop commercial-scale lithium in south Arkansas’s Smackover Foundation.

Chevron U.S.A. Inc., based in Houston and a subsidiary of the Fortune 100 oil conglomerate Chevron Corp., announced on Tuesday, June 17, that it has acquired 125,000 net acres in the Smackover Formation from TerraVolta Resources and East Texas Natural Resources (ETNR) LLC. These two leasehold positions are located in the Smackover Formation, where Arkansas regulators recently approved new royalty rates for future development.

Chevron, the nation’s second-largest publicly traded oil company behind ExxonMobil, said this formation is of particular interest due to its notably high lithium content and marks Chevron’s first step toward establishing a commercial-scale, domestic lithium business.

“This acquisition represents a strategic investment to support energy manufacturing and expand U.S.-based critical mineral supplies,” said Jeff Gustavson, president of Chevron New Energies. “Establishing domestic and resilient lithium supply chains is essential not only to maintaining U.S. energy leadership but also to meeting the growing demand from customers. This opportunity builds on many of Chevron’s strengths, including subsurface resource development and value chain integration.”

Although Chevron did not disclose details about the location of the company’s leasehold position or the financial terms of its deal with TerraVolta and East Texas Natural Resources, the former San Francisco-based oil conglomerate, whose roots trace back to John D. Rockefeller’s Standard Oil Company monopoly, provided an explainer on its website regarding its venture into the lithium business.

“As demand for digital conveniences and EVs continues to increase, lithium has become one of the world’s most sought-after natural resources,” said Rania Yacoub, corporate business development manager for Chevron New Energies. “Chevron is looking to help meet that demand and drive U.S. energy competitiveness by sourcing lithium domestically.”

In highlighting its plans for its south Arkansas purchase, Chevron said future development will aim to utilize the direct lithium extraction (DLE) process, a newer technique that’s gaining traction in the oil and gas industry. This process extracts lithium from the brine and injects the remaining water back into the reservoir.

The Houston energy giant said it will seek to deploy this emerging technology, which allows for faster and more efficient production and is expected to have a smaller environmental footprint compared to traditional extraction methods.

“Extracting lithium from brine aligns with Chevron’s core capabilities,” said Chris Powers, vice president of CCUS & Emerging for Chevron New Energies. “Leveraging the same skill sets and workflows from the hydrocarbon business—subsurface appraisal, asset development planning, wells and operations—we are positioned to characterize this resource and plan for future growth.”

During Chevron’s recent first-quarter conference call, CEO Mike Wirth told analysts that ongoing “macro uncertainty” had led the oil giant to cut its 2025 capital spending budget by an additional $2 billion and to target $2 billion to $3 billion in structural cost savings by the end of 2026.

“Recent macro uncertainty underscores the importance of cost and capital discipline,” Wirth said. “Chevron has a proven track record of managing through uncertainty and commodity cycles, and with longstanding financial priorities as our guide, we’re well-positioned to win in any environment.”

Chevron, widely recognized for its extensive oil and gas exploration and production projects around the globe, including a recent deep-water discovery in the Gulf of Mexico, a major liquified natural gas project in south Africa, and the expansion of the Tengiz oil field in Kazakhstan, announced in late 2024 that it plans to reduce its low carbon and clean energy budget to $1.5 billion in 2025, down from the previous forecast of $2 billion.

Arkansas regulators approve 2.5% royalty rate

Chevron’s entry into the south Arkansas lithium market is a major development, as it comes after last month’s approval by the Arkansas Oil and Gas Commission (AOGC) of a new royalty rate for the first lithium project in the Smackover Foundation. During a special hearing in Magnolia on the South Arkansas University campus on May 29, the AOGC unanimously approved a 2.5% royalty rate for the Reynolds Unit for Phase I of its Southwest Arkansas Project in Lafayette and Columbia Counties for Smackover Lithium, a joint venture between Standard Lithium Ltd. and Norwegian energy giant Equinor ASA.

The decision by the Arkansas oil and gas regulators is a colossal victory for Standard Lithium, Equinor and other energy producers that plan to invest in the south Arkansas lithium play, including the nation’s largest energy conglomerate, ExxonMobil Corp., and a long list of publicly traded and privately held corporations with billions to invest. In November, AOGC regulators unanimously rejected Standard Lithium’s applications for a 1.82 percent royalty rate, thereby postponing any planned commercial development.

During the two-day AOGC hearing on Nov. 5 and 6, the royalty application filed by Albemarle, Standard Lithium, Lanxess, Tetra, and Exxon-affiliate Saltwerx requested the 1.82% royalty to jumpstart lithium production across Lafayette, Columbia, and Union counties in 2025. They stated that without a royalty agreement in hand, the companies would not be able to determine their production costs and long-term investments fully.

However, South Arkansas landowners countered that the royalty rate filing from the lithium producers was well below their expectations.  During the hearings, the South Arkansas Minerals Association, which represents dozens of landowners and businesses in the Smackover Formation, testified that a 12.5% royal rate was “fair and equitable.” Similarly, a 12.5% royalty rate is assessed for oil and gas extraction under Arkansas law.

The facilities for the SWA project are planned to be located in Lafayette County, approximately 7 miles south of Lewisville, Arkansas. The brine unit supplying lithium-bearing brine for the project spans Lafayette and Columbia counties. Subject to a favorable investment decision by the two lithium producers, the project is anticipated to create up to 300 construction jobs and 100 direct jobs.

Like other developers in the Arkansas lithium play, Chevron offered nebulous details of its 125,000 acre leasehold position, saying it is “situated across regions where the Smackover Formation is present, specifically spanning Northeast Texas and Southwest Arkansas.”

In the past year, however, ExxonMobil and other top corporations such as Potlatch Deltic Timber, and multinational mining conglomerates like Albermarle Corp. and Lanxess AG have announced their intention to invest billions of dollars in lithium production at the Smackover Formation, a geologic structure extending under parts of Arkansas, Louisiana, Texas, Alabama, Mississippi, and Florida, which is significant in lithium production.

According to an October 2024 report by the U.S. Geological Survey, in coordination with the Arkansas Department of Energy and Environment, 5 and 19 million estimated tons of unproduced lithium reserves lie beneath this formation. This makes it a key area for potential lithium extraction and a focus of the current industry developments.

“If commercially recoverable, the amount of lithium present would meet projected 2030 world demand for lithium in car batteries nine times over,” the report states.

ExxonMobil is targeting its first lithium production for 2027 and is evaluating growth opportunities globally. By 2030, ExxonMobil aims to produce enough lithium to supply the manufacturing needs of well over a million EVs per year. Officials said discussions with potential customers, including EV and battery manufacturers, are ongoing.

On Jan. 31, ExxonMobil reported profits of $33.7 billion on yearly revenue of nearly $350 billion. In 2025, the Spring, Texas-based oil and gas and chemical producer expects capital expenditures of $27 billion to $29 billion and $28 billion and $33 billion between 2026 and 2030.

EMG, a Texas-based private equity firm focused on the natural resources sector with over $17 billion in assets under management, is the majority owner of TerraVolta, an exploration and production company that first announced in June 2024 that it had successfully drilled a test and supply well in the southern Arkansas lithium play.

At the time, EMG also announced that it was accelerating its investment in TerraVolta, enabling the startup drilling company to secure a significant strategic position within the

Founded in 2022, Houston-based East Texas Natural Resources (ETNR) is led by Sergei Pokrovsky. Before the Chevron Deal, TerraVotal and ENTR have remained tight-lipped about their investment in South Arkansas and the specific location of their lithium developments.