CVX, XOM & CNOOC in Dispute Over Hess Stake in Guyana Oil

Chevron in discussions with ExxonMobil regarding Guyana interests held by Hess
Feb. 29, 2024
www.ogj.com/general-interest/companies/article/14305921/chevron-in-discussions-with-exxonmobil-regarding-guyana-interests-held-by-hess

Chevron Corp. and Hess Corp. have been in discussions with ExxonMobil Corp. and China National Offshore Oil Corp. regarding a right of first refusal provision in the joint operating agreement for the Stabroek block offshore Guyana.
Mikaila Adams

Chevron confirmed the discussions in a Feb. 26 filing with the US Securities and Exchange Commission (SEC).

In October 2023, Chevron entered a deal to acquire Hess in a stock deal valued at $53 billion that would see Chevron gain Hess’s 30% non-operated interest in the ExxonMobil-operated Stabroek block (45%) (OGJ Online, Oct. 23, 2023).

“If these discussions do not result in an acceptable resolution and arbitration (if pursued) does not result in a confirmation that such right of first refusal provision is inapplicable to the merger, then there would be a failure of a closing condition under the Merger Agreement, in which case the merger would not close,” Chevron said.

Stabroek block, Guyana
Stabroek block is held through a consortium comprised of ExxonMobil (operator, 45%), Hess Guyana Exploration Ltd. (30%), and CNOOC Petroleum Guyana Ltd. (25%). Reserves are estimated at 11 billion bbl. The area lies over 200 km offshore Guyana and spans more than 6.6 million acres.

ExxonMobil made four additional discoveries on Stabroek block in 2023. Prosperity, the third floating production, storage, and offloading (FPSO) vessel, started production at the Payara development on the block in November 2023. Liza Destiny and Liza Unity FPSO vessels continued to produce above nameplate capacity. Combined gross production from the three operating vessels exceeded 390,000 b/d of oil in 2023 and nearly 440,000 b/d in fourth-quarter 2023, ExxonMobil said in a Feb. 28 SEC filing.

Yellowtail and Uaru, the fourth and fifth developments on the block, are progressing on schedule and will each initially produce about 250,000 b/d, the operator continued, telling the SEC it anticipates six FPSOs will be in operation on Stabroek block by year-end 2027.

To me, it appears that if Hess were to sell it's Stabroek stake but remain as an
independent oil company otherwise with all the rest of it's assets, then Exxon
would have a case.

But in this case, ALL of Hess was purchased by Chevron, so the acquiring company,
by virtue of the fact that all of Hess's interests are still intact within the
acquiring company, retains ownership of Hess's assets. If one thinks of the
Chevron/Hess combination as a "merger", rather than an acquisition, it becomes
more meaningful.

Regardless, it's quite possible that Hess and Chevron could move to slow the
timelines of Stabroek development until this matter is resolved.

Here's another slant:

Exxon Guyana Slap at Chevron Highlights Supply Security Importance
By Irina Slav - Mar 02, 2024, 6:00 PM CST
oilprice.com/Energy/Energy-General/Exxon-Guyana-Slap-at-Chevron-Highlights-Supply-Security-Importance.html

- Without Guyana, there would be little point to the tie-up between Hess and Chevron.
- Exxon said its partnership terms with Hess Corp. give it—and their third partner, Chinese CNOOC—the right of first refusal to the acquisition of Hess Corp.'s stake in the Stabroek Block.
- It makes perfect sense that Exxon would fight for a bigger share of the Guyanese pie to secure higher future profits when the deficit materializes.


When Chevron announced it had struck a deal to acquire Hess Corp. for $53 billion last year, it was seen as yet another move by a supermajor to secure future oil supply at reasonable production cost.

Just how important securing this supply is not only for Chevron but for its peers became clear last week, when Exxon surprised many with the warning that it could make the deal meaningless by exercising a right of first refusal stipulation in its Guyana partnership with Hess Corp.
Without Guyana, Chevron has signaled, there would be little point to the tie-up—despite Hess's interests in the Permian and elsewhere in the shale patch.

On Monday, Exxon said its partnership terms with Hess Corp. give it—and their third partner, Chinese CNOOC—the right of first refusal to the acquisition of Hess Corp.'s stake in the Stabroek Block. This is the patch of offshore acreage where the consortium has made a string of more than a dozen discoveries, tapping an estimated 11 billion barrels and counting.

The announcement came as a surprise to many who appear to have assumed that Exxon would make no trouble for Chevron in its attempt to take over Hess's 30% interest in Guyanese offshore oil. In fact, it should not have been that surprising.

In just a few short years, Guyana has emerged as possibly the hottest spot in global oil besides the Permian. The nation of fewer than a million people is believed to be sitting on oil resources worth over half a trillion dollars.

Right now, Guyana produces some 400,000 barrels of oil daily, all from wells drilled by the Exxon-led consortium in the Stabroek Block. The plan is to extend this to 1.2 million barrels daily in the next three to four years. That level of production would put Guyana ahead of some OPEC producers.
Related: This Could Be A Gamechanger For Natural Gas In Europe

These expansion plans seem counterintuitive for those following oil demand forecasts from the International Energy Agency. According to its latest, oil demand is about to peak around the same time that Guyana's oil production surpasses 1 million bpd. Exxon and Chevron appear to disagree, with both prioritizing Guyana as a destination for future investments.

This comes at a time when the reserve replacement ratio in global oil is at a dismal rate that could see the market swing into a deficit as soon as 2025, according to Occidental's CEO Vicky Hollub.

"We're in a situation now where in a couple of years' time we're going to be very short on supply," Hollub said earlier this month.
In such a context, it makes perfect sense that Exxon would fight for a bigger share of the Guyanese pie to secure higher future profits when the deficit materializes. But it also makes sense to use the threat as a way of making Chevron share the investment load for the Guyanese projects.

This is what some analysts believe is happening. Exxon was "very possibly looking to extract a pound of flesh from Chevron to support the deal proceeding," analysts from MKP Advisors said in a note, quoted by Reuters. "It is very possible they want greater commitments from Chevron than Hess has previously signed up to."

It is a very interesting situation in which it appears difficult to say who's right and who's wrong. Per Exxon, a right of first refusal applies to Hess's stake in the Stabroek Block. Per Chevron and Hess itself, it does not apply because the deal with Chevron is for the whole company and not only for its Guyanese assets.

The case is quite complicated, it seems, and it could end in more than two ways, with some predicting that Exxon might end up buying Hess instead of Chevron.

While these developments and speculation make for some light entertainment for observers, the importance of the Guyanese project stands out as the ultimate casus belli, as it were. And this is because there is a shrinking pool of undiscovered oil resources that can be developed as cost effectively as the resources in Guyana's Stabroek Block.

In addition to this decline in undiscovered but cheap-to-exploit resources, supermajors have become a lot more risk-averse than they used to be in the past when long-term demand for increasing volumes of oil was virtually guaranteed. Now, it isn't. And while this is not because of any natural processes, such as better alternatives to oil emerging as fuels, it is a dangerous prospect that Big Oil is aware of—which is why it is seeking to focus on low-cost, abundant resources.

In the end, however, Chevron and Exxon are in the same boat, as expressed colorfully by Smead Capital Management's Bill Smead at a recent industry event.

"They can get into a fist fight but I think they will settle and then go grab a beer," Smead told Reuters, noting that the two supermajors had a common interest in fighting back against climate activists seeking to put an end to all oil investment.

By Irina Slav for Oilprice.com

Some history for perspective and how long the major players expect Guyana's offshore oil & gas to last.

And now this...

Guyana Oil Development Back In Focus After Chevron, Hess Deal

David Blackmon, Senior Contributor - Nov 8, 2023, David Blackmon is a Texas-based public policy analyst/consultant.
www.forbes.com/sites/davidblackmon/2023/11/08/guyana-oil-development-back-in-focus-after-chevron-hess-deal/?sh=7aab11906805

Guyana Oil Boom

Last month’s announced $53 billion buyout of HessHES -1.7% Corp. by U.S. oil major ChevronCVX -2.6% places a new focus on Guyana, as Hess’s 30% share of the massive Stabroek block offshore development operated by fellow major ExxonMobilXOM -1.4% makes up the major prize in that deal. Since development of the resource commenced in earnest several years ago, this tiny South American nation of just around 800,000 people has become the world’s fastest-growing economy, with GDP growth of 62.3% in 2022

CNBC reports that BMI, a Fitch Solutions research group, projects 38% growth during 2023, and that the Guyanese economy could expand by 115% over the next five years. This is a massive economic impact, one so large that the Nicolas Maduro government in Venezuela recently renewed its longstanding claim to own rights along the western extent of the play area. The International Court of Justice (ICJ) ruled in April that it has jurisdiction to decide the controversy, a contention with which Guyana's President Irfaan Ali agrees, saying, "We've allowed this matter to go to the ICJ and we have continuously encouraged Venezuela to participate fully in the process and for both parties to respect the outcome of the process."

Regardless of the outcome of that controversy, the challenge for ExxonMobil is to continue to develop the resource in an orderly manner with its new partner and competitor Chevron, along with longstanding consortium partner CNOOC, which owns a 25% share. It is the kind of challenge that is not uncommon for developers of international energy projects in distant parts of the world.

A global oil power in the making

“I don’t think it’s going to change where we are headed or any of the dynamics of the development,” Drew Bishop, Development Manager for Guyana at ExxonMobil, told me when I asked about the impact of Chevron becoming a consortium partner. “We feel like that's a real compliment because it says they have a lot of confidence in our ability to deliver quality investments on schedule and budget.”

The ExxonMobil Guyana team has been delivering such results since 2015, during which time the company has been able to report more than 30 successful discovery wells totaling almost 11 billion barrels of proven reserves. The Lancetfish 2 well announced in late October brought the company’s number of 2023 discoveries to three, as it continues drilling efforts designed to delineate the underground geologic extent of the resource area.

“If you think about what we're doing out there, we're exploring and appraising,” Bishop says. “We're looking for new resource trying to ensure we understand the resources we’ve already discovered. We have the core area where our funded FPSOs are planned, and we're trying to build on that success with new discoveries and then delineating those.”

FPSO is the acronym for Floating Production, Storage and Offloading vessels, giant ships that function as floating processing plants. ExxonMobil currently has two FPSOs in operation today, with another anticipated before the end of 2023. Current plans anticipate a total of six FPSOs to be in place and operating by 2027.

Production from Stabroek exceeded 400,000 barrels of oil per day by mid-2023, and is expected to rise to over 1 million bpd by 2027. Assuming it prevails in its territorial controversy with Venezuela, that level of production would rank Guyana as one of the world’s 20 largest oil producing countries.

More at stake than economics

It is key to note that the Guyanese government is also using its share of the Stabroek resource to help lower its emissions profile. An important part of this is what it refers to as its Gas to Energy Project, in which it is using natural gas from Stabroek wells to cut its use of diesel and fuel oil in power generation, along with other applications.

The role of ExxonMobil and its consortium partners is to build a 200 km pipeline to bring the gas to an onshore interconnect point, along with the onshore extent of the pipeline and preparing the site for a planned natural gas power plant. The Guyanese government is in the process of awarding contracts for the construction of the power plant, along with other needed infrastructure.

“The project is going to plan,” Bishop says. “We're making good progress for laying pipe onshore. We're laying pipe offshore. We've prepared the ground where Guyana's power plant is going to be and handed that back to government.” Once the power plant is up and running, Guyanese officials believe it will not only cut emissions, but also reduce consumers’ power bills by up to 50%.

The Bottom Line

Make no mistake, Stabroek is a long-term project. When asked how long the development phase of the resource would take, Bishop says the project “is still in its infancy. We’ve only been in production on the initial project for four years. When you think about it, a reservoir’s life is 20, 30, 40 years, we’re in the infancy of it. It doesn’t take an expert to say it will be a couple of decades.”

Bishop notes that the company’s primary license runs for 20 years, and at the end of that it provides for a 10-year extension assuming the operators are in good standing with the government. And it is reasonable to believe the consortium will discover additional resource plays in the coming years as it proceeds through the development process.

So, it is no wonder that the 30% piece of Stabroek is the central prize Chevron seeks to obtain through its Hess Corp. acquisition. It is, after all, one of the most massive prizes under development globally, a resource so immense it has reignited a territorial constroversy between neighboring countries.

Exxon Signals Potential Counter Offer for Hess's Guyana Assets
By Sabrina Valle Mar 6, 2024
www.oedigital.com/news/512054-exxon-signals-potential-counter-offer-for-hess-s-guyana-assets

Exxon Mobil Corp on Wednesday said it filed a contract arbitration claim disputing Hess Corp's proposed sale of its Guyana oil properties, and suggested it may counter Chevron Corp's pending deal for the assets.

The arbitration case seeks to preserve Exxon's right to acquire Hess's 30% stake in the giant Stabroek offshore oil block, Senior Vice President Neil Chapman said in a conference on Wednesday.

Stabroek, which is consider the largest oil discovery in decades, is the prize in Chevron's bid for Hess. Exxon made clear for the first time it would bid for the Hess's Guyana properties if Chevron proceeds with its proposed $53 billion Hess purchase.

"I don't know if the Chevron transaction is going to proceed or not, that is in their hands," Chapman said at a Morgan Stanley event in New York. "If there is a transaction, we plan to exert our preemption rights," he said.

Chevron and Hess have said they believe the rights do not apply as the transaction would involve a merger with the parent company that would keep Hess's Guyana subsidiary intact.

“We remain fully committed to the transaction, and are confident in our position. We look forward to closing the transaction on the terms we’ve agreed,” Chevron spokesperson Braden Reddall said in a statement.

Chevron's bid for Hess is "an attempt to circumvent" the joint operating agreement that governs the partners' roles in the Stabroek block, Chapman said.

Exxon's challenge could prove fruitful even if it does not end up enlarging the oil company's holdings, analysts have said.

Its arbitration filing "could be a negotiating stance," said Mark Kelly, CEO of financial firm MKP Advisors. Wednesday's drop in Hess stock "suggests that the market is somewhat happy" with Exxon's stance it has a right to Hess’ stake in Guyana, he said.

Hess shares fell 1.6%, Exxon shares were up 1% and Chevron's stock was down a fraction, in afternoon trading.

Exxon now holds a 45% stake in the consortium and operates all of its production. If it bought Hess's share, it would hold 75% of the block.

A contract arbitration case typically takes six months or more, Chapman said.

"The preemption rights are to give us the opportunity to look at the value, which we can then match should we choose to do so," Chapman said.

The company has been negotiating with Chevron and Hess over its right of first refusal to any sale of Hess's Stabroek stake. It formally filed for arbitration on Wednesday with the International Chamber of Commerce after failing to reach agreement, he said.

"We, as participant (in the block), have the rights to match a reasonable allocation of the value of the Hess transaction," Chapman said. "Disputes take place all the time, and they get resolved. The only real difference is this is in the public domain."

Exxon's arbitration filing raises the stakes for Chevron but also adds a new wrinkle to the largest U.S. oil company's $60 billion proposed purchase of Pioneer Natural Resources. That deal would make Exxon the largest oil producer in the top U.S. oil field.

Will this CVX deal end up being the bride left at the alter, again? That might not be so bad for the deepwater drillship market if it also mean Hess would have to compete for more spec floaters.

And now this...

Chevron's CEO Faces Challenges of a Lifetime with Hess Bid

By Sabrina Valle Mar 8, 2024
www.oedigital.com/news/512105-chevron-s-ceo-faces-challenges-of-a-lifetime-with-hess-bid



Chevron CEO Michael Wirth (Photo: Chevron)

Chevron CEO Michael Wirth is facing a head-to-head match with Exxon Mobil with his $53 billion bid for Hess and its stake in oil hotspot Guyana, and could wind up trapped in a dispute between two of South America’s biggest energy rivals.

On Wednesday, Exxon filed an arbitration claim that could block Hess' proposed merger with Chevron. The sale includes Hess' 30% stake in a consortium that has discovered more than 11 billion barrels of oil in Guyana's Stabroek offshore block, which analysts say has potential recoverable oil at upwards of 20 billion barrels.

Exxon, which holds a 45% share of the consortium, with Hess and CNOOC owning minority stakes, claims the operating agreement governing the group gives it a right of first refusal to any sale of Hess's Guyana oil assets.

The contest for a share of the largest oil discovery in almost two decades could soon test Wirth’s famously calm demeanor. But a deal would be a legacy-maker for Wirth, who is known at the second-largest U.S. oil firm as an affable but firm boss.

Wirth won accolades on Wall Street for his refusal to get involved in a bidding war for Anadarko Petroleum in 2019, and then moved to boost Chevron’s reserves through a series of small deals.

His ability to play a long-game served him well in Venezuela, where he held onto the company's properties there amid years of hyperinflation and punishing U.S. sanctions.

The 63-year-old executive declined to be interviewed.

A spokesperson, however, stressed the company remains "fully committed to the transaction, and is confident in our position. We look forward to closing the transaction."

Two broken deals?

If Exxon's challenge blocks Chevron's purchase, it would be the second time a deal slipped through Wirth's fingers. His $33 billion offer for Anadarko, just a year after he took over as Chevron CEO, was snatched away with a higher bid by Occidental Petroleum.

“The truth is that Wirth has been slow to come to the party and a step behind on almost everything,” said Bill Smead, founder and chairman of Smead Capital Management, who said Wirth also missed an opportunity in 2022 to buy Occidental with Anadarko's assets for $32 billion, less than the 2019 offer.

“Because of making decisions like that, he is in a food fight over assets in Guyana,” said Smead.

Wirth won a $1 billion breakup fee in the Anadarko loss, but Exxon said this week it would consider exercising its preemption right if Chevron pursues its bid. If Chevron drops the deal, Hess could be potentially off the hook for a $1.7 billion break up fee.

Exxon left open the prospect of a negotiated settlement.

Its arbitration claim before an international tribunal could take about six months or more to resolved, said Exxon Senior Vice President Neil Chapman, pushing back Chevron's goal of closing the deal by mid-year.

Hess on Thursday said it was reviewing the timeline for closing the deal.

Analysts said the dispute could go either way.

"It is still very possible" that Exxon sees the need to bid for Hess before a Chevron-Hess shareholder vote, which could happen in the next couple of months, said Mark Kelly, CEO of financial advisory firm MKP Advisors.

"Exxon has seemingly implied it really wants to own Hess’ stake in Guyana, so it potentially needs to put something competing on the table prior to a Chevron-Hess vote," he said.

Paul Sankey, an analyst with Sankey Research, said the other possibility is that Chevron is forced to pay Exxon to allow the deal to proceed.

"There's the possibility that (Chevron) cuts them a check and just says, "can you go away please? And there's the possibility that they (Exxon) goes to arbitration and delays the deal," he said.

Border tensions

Wirth’s misfortunes have piled up around the globe. Last autumn, he delayed for a second time a major expansion project in a Kazakhstan oilfield where it is the operator and Exxon is a partner.

Later, Venezuelan President Nicolas Maduro reactivated a century-old border dispute with Guyana and threatened to take over Guyana's oilfields by force.

“He (Wirth) has to stay super neutral and lay low,” while the two countries settle the dispute, said Francisco Monaldi, an expert on Latin American energy at Rice University’s Baker Institute for Public Policy.

"It would make sense for Chevron to treat Guyana an investment in which they are not making any decisions," he said. "It would make it easier for the Venezuelan government not to have to acknowledge that Chevron would be on both sides" of the dispute border.

As the only U.S. oil major that remained in Venezuela despite U.S. sanctions on the OPEC nation since 2019, Wirth faces a new challenge to its Venezuela operations.

Chevron last month produced about 180,000 barrels per day from its joint ventures in Venezuela - output that could again be barred from delivery to its U.S. customers if the sanctions are allowed to snap back.

"Everyone says he (Wirth) is a nice guy, he is in the right business, he will figure it out," Smead said. "If not this deal, he will get the next one."

(Reuters - Reporting by Sabrina Valle; Editing by Marguerita Choy)

Despite Guyana tiff, ExxonMobil leader says it’s not challenging Chevron-Hess merger

ExxonMobil chief executive Darren Woods says company not eyeing Hess acquisition

ExxonMobil chief executive Darren Woods.Photo: ANDREW MANGUM/UPSTREAM

Robert Stewart, North America Energy Correspondent, Houston - Updated 18 March 2024, 10:44
www.upstreamonline.com/field-development/despite-guyana-tiff-exxonmobil-leader-says-it-s-not-challenging-chevron-hess-merger/2-1-1614039

ExxonMobil chief executive Darren Woods said his company is not aiming to disrupt the proposed Chevron-Hess merger, despite the US supermajor’s rights challenge over an offshore Guyana block that is central to the megadeal.

“We’re not challenging the Chevron-Hess merger,” Woods said on Monday during an opening session at CERAWeek by S&P Global in Houston. “We were basically standing up for what we believe is a fundamental right that exists within the contract that the partner signed when developing that resource.”

ExxonMobil has initiated arbitration proceedings to assert its rights concerning oil discoveries in Guyana’s prolific Stabroek block, Upstream has reported. If successful, the move could upend Chevron’s $53 billion acquisition of Hess, which has a 30% interest in Stabroek. ExxonMobil operates the block with a 45% stake, while CNOOC Ltd holds 25%.

Woods laughed after Daniel Yergin, the chair of CERAWeek, led the session with a question for Woods about the Guyana tiff.

Woods said his company is merely trying to do what is in the best interest of ExxonMobil by asserting its right in the Guyana development, which he said could be one of the most successful deepwater projects of all time.

He said the contract for the Guyana development has “protocols in place” if a partner wants to leave it.

Shortly thereafter, Yergin asked whether ExxonMobil would pursue a Hess acquisition if the Chevron deal collapses.

Woods denied any interest, saying his company “wouldn’t have waited for Chevron” to make an offer if it had wanted Hess.

Woods also addressed ExxonMobil’s lawsuit trying to prevent a proposed climate resolution, pushed by climate activist investors, from being put up for a vote at the US supermajor’s shareholder meeting in May.

Woods said the shareholders being sued “are not legitimate investors” and have “hijacked” the shareholder process to advance their own agendas.

“Hopefully (the lawsuit) will help correct what has been a distortion of a process… that has been misused,” Woods said.

Feb Data: Production steady at Exxon’s Stabroek Block projects

By Kemol King, March 20, 2024
oilnow.gy/featured/feb-data-production-steady-at-exxons-stabroek-block-projects/


Data from Guyana’s Ministry of Natural Resources indicates that in the month of February, ExxonMobil’s Liza 1 and 2 developments demonstrated the steadiest output at their respective peak ranges since production began. Payara was also stable with just a few days of dips in output.

The Stabroek Block projects, including Payara, collectively averaged 626,000 barrels per day (b/d). This is a 4% increase from the 602,000 b/d rate in January. However, given fewer days in the month, total production in February decreased to 18.2 million barrels from 18.7 million in January.

While they collectively peaked at 647,000 b/d on February 26, the projects’ individual peaks indicate they can produce as high as 652,000 b/d.

Liza 1 averaged 160,000 b/d and peaked at 163,000 b/d.

Liza 2 averaged 252,000 b/d and peaked at 254,000 b/d.

Payara averaged 214,000 b/d and peaked at 235,000 b/d. Payara achieved first oil in November 2023 and surpassed its initial target production of 220,000 b/d in January. Exxon intends to optimize production at this project to hit 250,000 b/d.

Exxon plans to take the Liza field offline for a few weeks in the second half of the year. The period will facilitate hook up for the Gas-to-Energy pipeline.

All the FPSOs operating offshore Guyana to date have been built by Dutch floater specialist, SBM Offshore.

ExxonMobil has a 45% operating stake in the Stabroek Block, while Hess has a 30% stake and China’s CNOOC has a 25% stake.

Chinese partner sparks legal showdown in Guyana’s golden block

CNOOC Ltd joins ExxonMobil and Hess in fight over oil rights for Stabroek block, adding risk to Chevron’s mega-deal

CNOOC Ltd chairman Wang Dongjin Photo: CNOOC LTD

Xu Yihe, Asia Correspondent, Singapore - Updated 21 March 2024, 09:15
www.upstreamonline.com/finance/chinese-partner-sparks-legal-showdown-in-guyana-s-golden-block/2-1-1615982

Chinese offshore giant CNOOC Ltd has started arbitration proceedings to assert its rights over oil discoveries in Guyana’s prolific Stabroek block.

This move marks the third arbitration filing to the International Chamber of Commerce in Paris, following similar moves by partners ExxonMobil and Hess.

CNOOC Ltd said the aim is to exercise its right of first refusal over Hess’s stake in the Stabroek block, hinting at a potential counter-offer for the coveted assets.

You need a subscription to read this story

This is definitely turning into a fight. Stabroek is a helluva prize.. considered to contain 30 billion barrels by the more aggressive estimates. Our hope for Transocean S/B that this gets resolved quickly because the more they fight, the more likely it is that E&D in the block is hampered.

Hess Board Recommends Merger With Chevron

By Charles Kennedy - Mar 29, 2024, 2:57 AM CDT
oilprice.com/Latest-Energy-News/World-News/Hess-Board-Recommends-Merger-With-Chevron.html

The board of directors of Hess Corp. unanimously recommended that shareholders vote in favor of the merger with Chevron.

That’s according to a regulatory filing the company made this week as Exxon’s challenge of the $53-billion deal continues.

Chevron and Hess struck the merger deal late last year but soon after Exxon said its partnership terms with Hess Corp. give it—and their third partner, Chinese CNOOC—the right of first refusal to the acquisition of Hess Corp.'s stake in the Stabroek Block.

This is the patch of offshore acreage where the consortium has made a string of more than a dozen discoveries, tapping an estimated 11 billion barrels and counting. It is also a central reason for Chevron to acquire Hess Corp., with the company admitting that without this stake the merger basically wouldn’t be worth the effort.

The move sparked speculation that Exxon might try to take over Hess Corp. itself. Exxon has denied that. In response to the Hess Corp. filing this week it issued a statement that supported the merger.

“We look forward to continuing our successful operations in the Stabroek block with Chevron, pending the deal closing,” the statement said, according to Hess.

Even so, Exxon is moving forward with its arbitration case regarding the merger, seeking to assert its rights in the Stabroek Block, per CEO Darren Woods.

"We're basically standing up for what we believe is a fundamental right," Woods told Reuters on the sidelines of CERAWeek. The company, he said was seeking to "secure and confirm the rights in that contract gives the existing partners."

Despite its stated support for the merger, Exxon might still derail it: the Reuters report citing Woods also said that Exxon has not ruled out buying out Hess from the Guyana project. Hess has a 30% interest in the Stabroek Block.

By Charles Kennedy for Oilprice.com