A Chevron Corp. (NYSE: CVX) executive revealed that the company's decision to relocate its headquarters from California to Texas was primarily due to the challenging business environment in California.
What Happened: The relocation of Chevron's headquarters was a result of the increasing difficulty of conducting business in California, says Andy Walz, Chevron's President of Americas Products, reported Fox Business on Friday.
The move was also attributed to the high cost of living and the challenges in recruiting and relocating employees to California.
"We've been doing that because California is a tough place to do business," said Walz. "It's a tough place to recruit people. It's a tough place to move employees - a lot of our employees move up through the company, they gain experience in different geographies, different locations and we have a lot of people who will not move to California. That makes it difficult."
Despite the headquarters move, Chevron will maintain a significant presence in California, including its refineries and retail network. Walz emphasized that the decision was not politically motivated but aimed at achieving better business outcomes.
Walz also highlighted that Texas offers a more favorable business climate, lower cost of living, and proximity to industry partners. "In Texas, we're welcome. Our industry is welcome," he said.
Why It Matters: Chevron's decision to move its headquarters is part of a broader trend of major corporations relocating from California to Texas. This trend has been highlighted by recent moves from other companies, including SpaceX and X, both owned by Elon Musk. Musk cited California's regulatory environment as a key reason for the move.
Additionally, Chevron's relocation comes shortly after the company reported disappointing second-quarter results, which saw its shares drop. The company missed expectations due to weaker upstream and downstream results, although its Permian production hit a new record.
Additionally, Chevron's move comes on the heels of a lawsuit filed by California against the company and other energy firms, accusing them of downplaying the risks associated with fossil fuels.
Price Action: Chevron Corp's stock closed at $144.99 on Friday, up 0.35% for the day. However, year to date, the stock has declined by 3.00%, according to data from Benzinga Pro.