Supermajor Chevron Corp., Houston, announced it has finalized its acquisition of Hess Corp., New York, following a favorable arbitration ruling in a legal battle against rival ExxonMobil Corp., Spring, Texas, concerning Hess’ offshore Guyana assets.
The $55 billion acquisition, which marks one of the largest energy industry deals in recent years, sees Chevron gain significant assets, including a 30% interest in Guyana’s prolific Stabroek Block — estimated to hold more than 11 billion barrels of recoverable oil equivalent.
The deal was first announced in October 2023 but stalled following arbitration claims from ExxonMobil and China National Offshore Oil Corp., Beijing, Hess’s partners in Guyana, asserting a pre-emptive right to buy Hess’s prized stake in the deepwater oil venture.
On Thursday, the Federal Trade Commission lifted its restrictions, clearing way for the acquisition, Chevron said.
“This merger of two great American companies brings together the best in the industry,” said Mike Wirth, Chevron chairman and CEO. “The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders.”
Hess CEO John Hess will join Chevron’s board, pending board approval, the company said.
“We are proud of everyone at Hess for building one of the industry’s best growth portfolios including Guyana, the world’s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer,” said John Hess. “The strategic combination of Chevron and Hess creates a premier energy company positioned for the future.”
In the deal, Chevron also adds 463,000 net acres in the Bakken shale, complementary production in the U.S. Gulf, and natural gas assets in Southeast Asia.
Chevron said it expects the deal to be accretive to cash flow per share beginning in 2025 and to drive growth into the next decade. The company anticipates $1 billion in annual run-rate cost synergies by the end of 2025 and has stated that its capital expenditures budget will range from $19 to $22 billion.
“This accretive transaction is expected to drive significant free cash flow and production growth into the 2030s,” added Eimear Bonner, Chevron's chief financial officer. “We are quickly integrating our two companies and expect to achieve $1 billion in annual run-rate cost synergies by the end of 2025. All of this should enable even higher returns to shareholders over the long-term.”
Under the terms of the agreement, Hess shareholders will receive 1.0250 Chevron shares for each Hess share held. Chevron will issue approximately 301 million shares from its treasury and cancel 15.38 million shares of Hess common stock it previously acquired on the open market.
