Data Centers in the Permian Basin Part 3 - First Comes Power
Thoughts on Recent Developments: Chevron, Eric Schmidt's Bolt Data & Energy, Texas Pacific, LandBridge, and WaterBridge
On December 17, 2025, Texas Pacific Land Corporation (“TPL”) announced a strategic agreement with Bolt Data & Energy (“Bolt”), as well as investment into Bolt (1) in the amount of $50M (2). Bolt is chaired by Eric Schmidt, the former Chairman and CEO of Google. The below quote from Eric supports the data centers in the Permian Basin thesis that has been discussed by the management teams of both LandBridge and TPL.
While the announcement seems like a major step forward for this thesis given the affiliation of Eric Schmidt, TPL’s stock price performance since the announcement has been somewhat lackluster. I suspect that the market will give more credit to the thesis once a definitive contract is signed with a major hyperscaler. Other announcements and some hard to find, yet publicly available, data may provide some clues as to how this could play out.
Chevron’s Power Generation Announcement
On November 12, 2025, Chevron announced a project in West Texas (the “Project”) where they would build a 2.5GW gas-fired power generator that is expandable to 5.0GW. The project is targeting operations to begin in 2027 with a definitive decision to move forward in early 2026, contingent on securing an acceptable off take agreement, which I view as being an AI data center that has a long-term contract with a hyperscaler.
Of course, West Texas can mean a lot of different places, but given Chevron’s ample mineral reserves in the Permian, it makes sense that it is there. In fact, there are a few pieces of evidence (I’ll discuss two) that indicate that the Project is being targeted for placement near Pecos in Reeves County. These two pieces are evidence are tax abatement applications that Chevron filed with Reeves County and the State of Texas. The form filed with state is more voluminous and includes an economic impact study by Kroll – presumably this was paid for by Chevron. So, what do they say? First, the project is expected to cost roughly $6.5 billion. This is a massive project. I would point out that if Chevron wants to be operational by 2027, given the tightness of power generation equipment, I imagine that the equipment is already ordered. Second, Chevron is contemplating the Project to sit on ~7,000 acres of land. Chevron owns some, but not all, of the 7,000 acres. Third, other contributed land includes, but is not limited to, land owned by TPL and Oxy USA. In some of the documents, LandBridge affiliate WaterBridge is also included as a contributor of land. Now before you go and get too excited, I would point out that the Reeves County Commissioners’ Court is scheduled to discuss the abatement for the Project at its next two meetings, so it does not look like the tax abatement is finalized. Also, I found a very small and obscure article that referenced this tax abatement request and indicated that Chevron is considering five other locations. That said, I cannot find any other tax abatement requests by Chevron, so this location seems to be the preferred one subject to them receiving an acceptable level of tax abatement. Below is a map of the county the proposed location of the Project.
What Does this Mean for the Data Center in the Permian Thesis?
To start, you have Chevron who looks to be willing to write a big check to build a power generator to supply power to a data center. Securing the source of power is the first step. Assuming the tax abatement process goes smoothly, all that would be left would be to secure the data center partner that is backed by a hyperscaler. I do not think that your first data center would need to be next door to the power generation facility, but it would likely not be too far away. One could see how TPL, with its vast surface holdings, could be an ideal partner for Chevron (LandBridge also has land in Reeves County). The timing of the Bolt investment is curious, and it is quite possible that TPL could partner with Chevron via their Bolt interest.
Looking at this from a downside perspective, it is possible that there would be no partnership with TPL on the data center land and that TPL is merely contributing land to the power generation project. Although, I do find it hard to believe that TPL would sell this land without extracting some sort of recurring revenue from Chevron. The Project should generate easements for gas (hopefully the gas is extracted from TPL land, and they get paid a royalty!), easements for power lines, gas pipelines, water pipes, not to mention the cleaning and supplying of water.
Overall, the only verifiable tie to TPL and the Chevron Project is the TPL land that is being included in the Project’s ~7,000 acres. That said, the willingness of Chevron to build a $6.5B power plant to supply power to data centers is validating of the Permian Basin data center thesis. Given the timing of the tax abatement meetings, one of two gating items (securing a tax abatement and an off take agreement) could be cleared shortly. When the second gating item is cleared, we will find out if TPL has a broader role in the Project and if Bolt is involved. My suspicion is yes. Either way, getting the first data center in the Permian Basin that is backed by a hyperscaler will prove out the thesis and likely benefit both TPL and LandBridge. If you have a data center on your land, that is a big win. But even if one is just near your property, you can likely benefit too via easements. Ultimately, each data center that comes to the Permian Basin will benefit the entire industry, as each will contribute to the ecosystem, and if this happens both TPL and LandBridge should greatly benefit. The first data center is the most important as it shows proof of concept. I don’t know if the Chevron affiliated data center will be first, but it is nice having them as a willing supplier of the power.
(2) Bolt raised $150M, including $50M from TPL and $50M from Horizon Kinetics.
Other Resources:
Disclaimer: Not an offer or a solicitation to buy or sell any security. For entertainment and informational purposes only. Do your own due diligence. Under no obligation to update on positions.
Update: LandBridge’s NRG power project announced in September has not yet applied for a tax abatement, but has filed for an air quality permit.