Latest news with #StabroekBlock
The Guardian
4 days ago
- Business
- The Guardian
Chevron closes $55bn Hess takeover after winning Exxon legal battle
Chevron closed its $55bn acquisition of Hess on Friday after winning a landmark legal battle against its larger rival Exxon Mobil to gain access to the largest oil discovery in decades. The strategy of Chevron's CEO, Mike Wirth, to turn around his company's lagging performance hinged on the acquisition, one of the largest energy deals in the past decade. The prize is a stake in the prolific Stabroek Block off the coast of Guyana that holds more than 11bn barrels of oil and is one of the fastest-growing oil provinces in the world. 'This merger of two great American companies brings together the best in the industry,' Wirth said in a statement. Exxon and the China National Offshore Oil Corporation (CNOOC), Hess's partners in Guyana, had filed arbitration disputes that claimed they held a pre-emptive right to purchase Hess's stake, which delayed Chevron's closure of the Hess acquisition for over a year. 'We disagree with the International Chamber of Commerce (ICC) panel's interpretation but respect the arbitration and dispute resolution process,' Exxon said in a statement. 'Given the significant value we've created in the development of the Guyana resource, we believed we had a clear duty to our investors to consider our pre-emption rights to protect the value we created through our innovation and hard work at a time when no one knew just how successful this venture would become,' the company added. CNOOC said it was also disappointed with the ruling. There is no appeals process at the International Chamber of Commerce, the court that oversaw the arbitration case. Even as it awaited the arbitration verdict, Chevron was making preparations so it could close the deal with Hess quickly, Reuters previously reported. Information technology workers from Chevron and Hess have met regularly to plan the integration, and Hess employees were informed that they could request a severance package following the deal's close. In an interview with Reuters on Friday, Wirth said converting technology and combining employees from both companies would take a few months. Shares of Chevron and Exxon were marginally lower in morning trading.
Yahoo
5 days ago
- Business
- Yahoo
Chevron wins huge legal fight against Exxon to close $53 billion Hess acquisition—getting access to the biggest oil discovery of the century
Chevron won its hotly contested legal battle against rival Exxon Mobil, allowing it to immediately close its $53 billion acquisition of Hess on July 18 and give the Big Oil major access to arguably the biggest oil discovery of the century offshore of sparsely populated Guyana. The long-awaited ruling from an arbitration panel overseen by the International Chamber of Commerce is a massive victory for Chevron and its CEO Mike Wirth who bet big on acquiring New York-based Hess despite the legal risks. Shares of Chevron jumped more than 5% in pre-market trading as the energy giant gained access to more than 11 billion barrels of discoverable oil equivalent in what's called the Stabroek Block and its 6.6 million acres offshore of Guyana in South America. Hess shares spiked about 11%. 'This merger of two great American companies brings together the best in the industry,' Wirth said in a statement. 'The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders.' Former Hess CEO John Hess also will join the Chevron board after a previous block was lifted July 17 by the Federal Trade Commission. Chevron announced its planned all-stock acquisition of Hess in October 2023 with the goal of closing the deal no later than June 2024. In mid-2024, Chevron announced that scheduling challenges meant that the arbitration panel would not hear the case until May 2025, keeping the deal in limbo for a substantial period of time and making investors wary it would ever come to fruition. Exxon, which made the Guyana discovery 10 years ago and operates the exploration and production there, had argued it had the right of first refusal for Hess' ownership of the Guyana stake. Chevron and Hess contended that right of refusal did not apply to the sale of the entire deal will make Exxon and Chevron partners in Guyana despite the rivalry and legal fight. Exxon said it in a statement that it disagrees with the ruling but respects the end result. 'Given the significant value we've created in the development of the Guyana resource, we believed we had a clear duty to our investors to consider our preemption rights to protect the value we created through our innovation and hard work at a time when no one knew just how successful this venture would become,' Exxon stated. 'We welcome Chevron to the venture and look forward to continued industry-leading performance and value creation in Guyana for all parties involved,' Exxon added. What Chevron wins Exxon will continue to lead the Guyana partnership with its 45% ownership stake, and Chevron will join as a 30% owner. China's CNOOC holds the remaining 25%. RBC Capital analyst Biraj Borkhataria said many investors were sitting on the sidelines, awaiting the arbitration results, and that Chevron is now set to benefit. He said the industry can now move on beyond the 'soap opera' and expect Chevron shares to outperform in the coming weeks. He said the focus will eventually shift to Chevron's free cash flow growth that comes from the deal going into 2026 and beyond. The merger adds nearly 500,000 barrels of oil equivalent daily to Chevron's portfolio, lifting its overall volumes from 3.35 million barrels a day to about 3.83 million barrels daily, based on their results from the first quarter. The compares to Big Oil leader Exxon and its 4.55 million barrels of oil equivalent a the Guyana stake is considered the crown jewel of the Hess deal, it's only one of the big parts of what Chevron acquires from Hess. The biggest source of oil and gas volumes for Hess is actually the maturing Bakken Shale in North Dakota. Hess holds 465,000 net acres of in the Bakken. Chevron also acquires Hess' assets in the Gulf of Mexico and its Southeast Asia natural gas is yet to be seen what, if any, Hess assets Chevron may seek to divest. Chevron already has large positions in both the U.S. Gulf and Asia. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
5 days ago
- Business
- Bloomberg
Chevron Celebrates Big Victory in Fight With Exxon
Amid the political inertia (or wholesale retreat) miring efforts to forestall the most catastrophic consequences of global warming, the industry primarily responsible for it saw a historic victory Friday. Following an unprecedented, 20-month fight between Chevron and Exxon-Mobil, Chevron emerged the winner. The prize? Chevron can now buy another fossil fuel company, Hess, for $53 billion. The ruling by an arbitration court ended a period of strategic limbo that hurt Chevron's stock and prompted questions over the quality of the company's due diligence when it agreed to snap up Hess in 2023. Exxon, which operates and owns 45% of Guyana's offshore Stabroek Block, claimed it had a right of first refusal over the disposition of Hess's 30% stake. Acquiring Hess and its interest in Guyana significantly increases the quality of Chevron's oil assets beyond the Permian Basin of Texas and New Mexico, narrowing the gap with Exxon. 'This creates a premier international and oil and gas company,' declared Chevron Chief Executive Officer Mike Wirth. Meanwhile, some hedge funds are really cashing in on the deal.
E&E News
5 days ago
- Business
- E&E News
Chevron acquires Hess for $53B after legal ruling
Chevron announced Friday that it has completed its $53 billion acquisition of Hess after an international commerce body ended a long-running legal battle that had hobbled the deal. The International Chamber of Commerce on Friday blocked rival Exxon Mobil's bid to force Hess to sell its stake in the Stabroek Block, a major offshore project off the coast of Guyana. 'This merger of two great American companies brings together the best in the industry,' wrote Chevron Chair and CEO Mike Wirth. 'The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders.' Advertisement The legal saga began after Chevron announced in 2023 it planned to acquire Hess. Exxon months later filed a grievance with the International Chamber of Commerce, which is one of the largest business organizations in the world. It also helps settle disputes among its member companies. Exxon argued that it had a contractual right to bid for Hess' 30 percent stake in the Stabroek Block.
Yahoo
5 days ago
- Business
- Yahoo
Chevron entry to Guyana oilfields solves company's top challenge
By Sheila Dang HOUSTON (Reuters) -Chevron's imminent entry into Guyana's rich offshore oilfields solves one of the biggest problems dogging the U.S. major: where its growth will come from beyond the next few years. On Friday, the U.S. oil producer closed its $55-billion acquisition of Hess - among the largest ever oil and gas deals - and gained the latter's stake in Guyana's Stabroek Block after prevailing in a legal fight against larger rival Exxon Mobil. Before the deal closed, concerns had been rising about Chevron's financial and production growth prospects, with its reserves of oil and gas dropping to the lowest in at least a decade. The Stabroek Block holds at least 11 billion barrels of oil equivalent and is one of the most significant oil discoveries in decades. "The combination enhances and extends our growth profile well into the next decade," Chevron CEO Mike Wirth said about closing the Hess acquisition. Some investors cheered the development as boosting the company's long-term prospects. "The acquisition plugs a free cash flow hole that Chevron had looming at the end of this decade into the 2030s," said David Byrns, a portfolio manager at American Century Investments, which has a $351-million position in Chevron, according to LSEG data. Without Hess, it was unclear how Chevron could maintain free cash flow, he said, adding the acquisition is also expected to help Chevron sustain its dividend into the 2030s. SHARES FALL The closure is a much-needed win for Chevron after several tough months during which it announced global layoffs, faced rising safety issues, and lost exports from Venezuela. Its shares fell 7.5% over the past year. On Friday, they declined 2% in midday trading. Chevron's oil and gas reserves, or the amount it can potentially extract from its oil and gas fields, fell to 9.8 billion boe at the end of 2024, the lowest point in at least a decade. Its organic reserve replacement ratio, a measure of how much new oil and gas was added to reserves compared to the amount it produced, and which excludes acquisitions and sales, was just 45%. A ratio of 100% or more means the company is replacing its reserves at the same rate that it depletes them. By comparison, UK-based oil major Shell and French oil major TotalEnergies both have average reserve replacement ratios over the past three years of more than 100%. Chevron production volumes after combining with Hess could reach 4.31 million boe/d in 2030, significantly higher than what Chevron would produce as a standalone company, said John Gerdes, president of Gerdes Energy Research. Chevron produced 3.3 million boe/d in 2024. Exxon, which operates the Stabroek Block, and CNOOC, the other minority partner in the field, filed arbitration claims against Hess last year, arguing they had a contractual right of first refusal to purchase Hess' stake. The battle was pivotal to Chevron, given that the Guyana field was the most coveted asset in Hess' portfolio. If the arbitration had gone against Chevron, the acquisition would have collapsed. Another long-term question that Chevron faces is whether it will extend its contract to operate the giant Tengiz oilfield in Kazakhstan, which expires in 2033. Chevron has a 50% stake in the Tengizchevroil joint venture that it operates. The company told Reuters in January the field would produce about 1 million boe/d after an expansion project reached full capacity. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
