Chevron Buying Hess For $53 Billion In Latest Major Oil Deal

TOPLINE

Chevron will acquire Hess Corporation as part of an all-stock transaction valued at $53 billion, the energy giant announced Monday, the second-largest deal by a major oil firm this month since a nearly $60 billion acquisition by Exxon Mobil nearly 2 weeks ago.

KEY FACTS

The deal values Hess at $171 per share and will provide Hess shareholders with just over 1.02 shares of Chevron for each Hess share at the deal’s closing, according to a joint statement.

Chevron will acquire 30% ownership of more than 11 billion barrels of oil equivalent in Guyana, which Hess CEO John Hess called the “world’s largest oil discovery” in the last decade, in addition to 465,000 acres of assets in the Bakken Formation in North Dakota.

With the new assets, Chevron said it expects to increase asset sales and generate $10 billion to $15 billion from the acquisition in before-tax proceeds through 2028.

The deal also includes unspecified “complementary” assets in the Gulf of Mexico and a “steady free cash flow” from natural gas business in Southeast Asia.

Shares for Chevron fell over 2% in early market trading on Monday morning, while shares for Hess fell slightly (0.28%).

Both companies said the deal is expected to close in the first half of 2024, pending approval by regulators and Hess shareholders.

CRUCIAL QUOTE

Peter McNally, an analyst for Third Bridge, said the “real prize” in the deal is Guyana-based assets, where “the country has vaulted into one of the most important growth areas for non-OPEC oil production.”

BIG NUMBER

Over 1 million. That’s how many barrels of oil equivalent are expected to be produced per day in Guyana by 2026, according to McNally.

KEY BACKGROUND

The Chevron deal follows an announcement earlier this month by Exxon, which said it would acquire Pioneer Natural Resources in a deal valued at $59.5 billion. Both deals come amid U.S. oil and gas production reaching near all-time highs, though oil companies had challenges acquiring new locations for drilling in recent years. Oil production in Guyana has increased after a net-zero production in 2019 to about 400,000 barrels per day in 2023, according to the Wall Street Journal. Guyana is expected to become one of the world’s fastest-growing oil developments over the next decade, the Journal reported, as larger oil companies—including Exxon and Cnooc—expand into the country.

FURTHER READING

Exxon Mobil Buying Pioneer Natural Resources For Nearly $60 Billion—In Biggest Deal In Decades (Forbes)

Chevron Buys Hess For $53 Billion, 2nd Buyout Among Major Producers This Month As Oil Prices Surge (Associated Press)

Chevron To Buy Hess Corp For $53 Billion In All-Stock Deal (Reuters)