Hess Reassesses Chevron's $53 Billion Merger Timeline Amid Exxon's Bid

(Reuters) — U.S. oil producer Hess said on Thursday it was reviewing the timeline for closing its merger with Chevron, after oil major Exxon Mobil signaled a potential counter offer for Hess's Guyana assets.

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

RELATED: Exxon Challenges Hess's Guyana Asset Sale, Signals Potential Bid

The arbitration case seeks to preserve Exxon's right to evaluate making a bid for Hess' 30% stake in the giant Stabroek offshore oil block if Chevron proceeds with its proposed $53 billion purchase of Hess.

Hess said on Thursday it disagreed with Exxon's interpretation of the agreement and were confident that its position will prevail in arbitration.

Chevron's acquisition of Hess has been stalled by the U.S. Federal Trade Commission's request for additional information on the merger. That request pushed back any closing to at least the middle of this year.

The initial deal announcement in October 2023 stated that Chevron Corp. agreed to buy Hess for $53 billion in stock to gain a bigger U.S. oil footprint and a large stake in rival Exxon Mobil Corp.'s massive Guyana discoveries, the latest in a series of blockbuster U.S. oil combinations.

RELATED: Chevron to Buy Hess for $53 Billion in All-Stock Deal

The top two U.S. oil producers in weeks have struck more than $110 billion in deals that will add years of oil output, much of it from U.S. shale. The deals will leave European rivals that had shifted their focus to renewable energy further behind in fossil fuels.

"This is great for energy security: It brings together two great American companies," said Chevron Chief Executive Michael Wirth, who has bulked up its shale oil and gas holdings by acquiring U.S. rivals PDC Energy and Noble Energy.

The combination of Hess, PDC, and Noble will bring Chevron's total oil and gas output to about 3.7 million barrels per day (bpd). It will expand Chevron's shale output by 40%, and put it neck and neck with Exxon's projected 1.3 million bpd shale output following its Pioneer Natural Resources acquisition.

“The Hess acquisition will meaningfully increase Chevron’s production, providing it with a substantial stake in the large low-cost development in Guyana. The transaction being all-stock makes the acquisition only modestly leveraging to Chevron’s very strong financial profile following multiple years of debt reduction,” Elena Nadtotchi, senior vice president for Moody’s Investors Service, said.

The deal gives Chevron a huge stake in Guyana, where it will become a 30% owner of an Exxon-operated field expected to produce more than 1.2 million bpd by 2027. Chevron operates in Guyana neighbors Venezuela and Suriname.

"This deal is all about the world-class Guyana asset, which is by far the crown jewel in the Hess portfolio, wrote Capital One Securities analysts in a note.

Chevron said it would sell between $15 billion to $20 billion in assets following the latest acquisition and plans to spend between $19 billion and $21 billion on major projects.

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