Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Chevron Faces Potential Hurdle from Exxon in $53 Billion Hess Acquisition
03/03/2024
This week, Chevron told its investors about a bump in the road with its plan to buy into a big oil project near Guyana. The problem is Exxon Mobil and China's CNOOC say they should get the first chance to make an offer against Chevron's plan to buy Hess's part in the project. This issue could mess up Chevron's plans, making it hard or impossible to finish the deal as they hoped.
Even with this challenge, Chevron is sticking to its plan and doesn't think Exxon or CNOOC will get the stake away from them. They're all in on buying Hess's share. Meanwhile, Exxon believes it has to look at its option to buy because Hess is selling its share.
This situation is heating up because the oil field in question is a really big deal. It's one of the biggest oil finds in a long time. Chevron wanted to buy Hess's share last October for this reason. Exxon, which is in charge of the oil project, found oil there in 2015 and says there are about 11 billion barrels in the ground. They also think they can get oil out of the ground twice as fast by 2027, reaching 1.2 million barrels a day.
CNOOC has yet to comment on the issue.
“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.
“We owe it to our investors and partners to consider our pre-emption rights in place under our Joint Operating Agreement to ensure we preserve our right to realize the significant value we’ve created and are entitled to in the Guyana asset,” Exxon said.
The contention over the Stabroek Block in Guyana highlights the region's critical role in the global oil market. Recently, there has been a rush by major oil companies to lock in shares of proven reserves.
Chevron maintains that Exxon and CNOOC's claim to preemptive rights does not apply in the context of its merger with Hess. The company argues that under no circumstances could Exxon or CNOOC acquire Hess’s interest in the Guyana project due to the Chevron-Hess transaction.
Nevertheless, Chevron has cautioned that there’s still a risk the acquisition might not proceed if Exxon and CNOOC manage to present a successful counteroffer.
Story Background
The core of the issue lies in a disagreement over a Joint Operating Agreement (JOA) established more than ten years ago, which sets the rules for the consortium. Hess joined this agreement in 2014 after buying its share from Shell. In some of these agreements (one involving Exxon), current partners have the right to match any offers for a change in ownership stakes.
In the case of the Guyana oil project, Exxon owns a significant 45% stake, while CNOOC has a 25% stake.
This dispute is a challenge for Chevron and its CEO, Mike Wirth, who recently acknowledged facing delays and going over budget on a major oil project in Kazakhstan. Chevron's shareholder returns have not kept pace with those of Exxon.
Last year, Chevron resumed oil production in Venezuela as U.S. sanctions eased, boosting production more quickly than expected. Chevron is also expanding its investments in Argentina's shale and starting exploration near Guyana, off the coast of Suriname.
If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
Exxon Plans to Tap Into Guyana's Natural Gas by 2030 and tensions with Venezuela
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/H247_Blog_Exxon Plans to Tap Into Guyana's Natural Gas by 2030 and tensions with Venezuela.png)
An Exxon Mobil-led group is looking into launching Guyana's first offshore natural gas project near its sea border with Suriname, according to an executive from the U.S. oil major.
Chevron Acquires Hess in $53 Billion Oil Megadeal Following Exxon's Pioneer Purchase
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/199Blog_Chevron to Acquire Hess for 53 Billion.png){kind=icon}
Chevron Corp has agreed to acquire Hess Corp in a $53 billion all-stock deal. This acquisition will not only enhance Chevron’s position in the domestic oil market but also fetch a substantial stake in Exxon Mobil's promising Guyana projects.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/328_Blog_Why Are Oil Giants Backing Away from Green Energy Exxon Mobil, BP, Shell and more .jpg)
As world leaders gather at the COP29 climate summit, a surprising trend is emerging: some of the biggest oil companies are scaling back their renewable energy efforts. Why? The answer is simple—profits. Fossil fuels deliver higher returns than renewables, reshaping priorities across the energy industry.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/327_Blog_Oil Market Outlook A Year of Growth but Slower Than Before.jpg)
The global oil market is full of potential but also fraught with challenges. Demand and production are climbing to impressive levels, yet prices remain surprisingly low. What’s driving these mixed signals, and what role does the U.S. play?
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/326_Blog_USA Estimated Annual Rail CO2 Emissions 2035.jpg)
Shell overturned a landmark court order demanding it cut emissions by nearly half. Is this a victory for Big Oil or just a delay in the climate accountability movement?