Chevron to proceed with hess takeover after winning Exxon Guyana legal battle
Chevron Corp will move forward with its $53 billion acquisition of Hess Corp after winning a landmark arbitration case against Exxon Mobil, clearing the way for access to one of the largest recent oil discoveries.
The victory validates CEO Mike Wirth’s strategy, as Hess’ most valuable asset is its 30% stake in the prolific Stabroek Block off the coast of Guyana. The offshore block holds more than 11 billion barrels of oil and is a key growth driver as Chevron seeks to improve its recent performance, News.Az reports, citing Reuters.
Shares of Chevron rose 3.6% in premarket trading, while Hess shares jumped 7.4%. Exxon shares edged slightly lower.
Exxon expressed disagreement with the ruling by the International Chamber of Commerce (ICC) arbitration panel but said it respected the dispute resolution process. The company argued it had preemptive rights to purchase Hess’ stake, citing the value it helped create in Guyana’s oil development.
The ICC’s decision is final, with no appeals process available.
Exxon, which operates the Stabroek Block with a 45% interest, and China’s CNOOC, holding 25%, had challenged Hess’ planned sale, claiming contractual rights of first refusal over the asset. Chevron and Hess maintained these rights did not apply to the full sale of the Hess company.
This legal dispute delayed Chevron’s takeover by at least a year and attracted intense industry scrutiny due to the high stakes involved. Experts noted the disagreement hinged on nuanced interpretation of joint operating agreements.
Despite the arbitration, Chevron prepared to close the deal swiftly, aiming to finalize acquisition-related operations within 45 days of the ruling.
The Stabroek Block, a major profit center for the Exxon-led consortium, has transformed Guyana’s economy and remains promising for further oil discoveries. Hess’ earnings from Guyana surged to $3.1 billion in 2024 from $1.9 billion in 2023, while Chevron’s adjusted earnings fell to $18.3 billion from $24.7 billion over the same period.
Similar news
