Chevron, Hess expect to complete merger this year despite dispute over Guyana oil bloc
30 Apr 2024
US multinational oil and gas company Chevron Corporation and its lesser peer Hess Corporation are reported to be going ahead with their planned merger despite arbitral proceedings launched by Exxon Mobil Corp over the ownership of Stabroek oil block in Guyana.
In fact, Chevron announced the agreement to acquire the assets and manpower of Hess, which, it said, would improve its production as well as free cash flow and strengthen long-term outlook.
Both Chevron and Hess also insist that they would be completing the merger process by the middle of this year.
Chevron Corp expects a resolution to a dispute with Exxon Mobil Corp. over the Guyana oil field in coming months that would clear its way for the $53 billion acquisition of Hess Corp.
Exxon argues that with 45 per cent ownership, it has the right of first refusal over the transfer of Hess’s 30 per cent stake in the Stabroek Block while Chevron insists that it is not an issue of asset transfer, but a corporate takeover.
Hess has asked for a hearing in the third quarter and expects the three-person panel of arbitrators to decide on it by the fourth quarter.
Once the merger is cleared of all hurdles, Chevron would be taking over the 30 per cent stake held by Hess subsidiary Hess Guyana Exploration Ltd. (HEGL) in Stabroek.
ExxonMobil is the operator of the offshore block with a 45 per cent interest through Esso Exploration and Production Guyana Ltd.
China’s state-owned China National Offshore Oil Corp (CNOOC), which holds the remaining 25 per cent through Petroleum Guyana Ltd, is also reported to have followed up with a similar claim against the change of ownership of the Guyana oil bloc.
Chevron Corporation had, in October 2023, entered into a definitive agreement with Hess Corporation to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion and an enterprise value of $60 billion, including debt.
The acquisition of Hess would add the exceptionally profitable Stabroek bloc in Guyana besides Hess’s Bakken assets to Chevron’s asset portfolio.
The Chevron-Hess deal would also require approval from the US Federal Trade Commission for the transaction to go through.
