Hess shareholders vote in favour of US$53B takeover by Chevron

May 29, 2024 News

Chevron and Hess logos are seen in this illustration taken, October 23, 2023. REUTERS/Dado Ruvic/Illustration

Kaieteur News – Hess Corporation (HES.N) on Tuesday approved the company’s US$53 billion merger with the No. 2 U.S. oil company Chevron, according to preliminary results of the vote. Reuters reported.

The merger required a majority vote to approve the deal by a majority of Hess’ 308 million shares outstanding to pass. The company did not immediately provide the vote tally. Chevron offered to acquire Hess last October in a move to gain a foothold in oil-rich Guyana’s lucrative offshore fields. The deal has been stalled by an ongoing review by the U.S. Federal Trade Commission and clouded by an arbitration claim filed by Hess’ partner in Guyana, Exxon Mobil (XOM.N) and CNOOC (0883.HK).

The result is a win for Hess CEO John Hess and puts to rest claims by some shareholders who wanted additional compensation for the delay in closing the sale. Exxon’s arbitration could push the deal’s closing into 2025. “Assuming Chevron wins the arbitration from Exxon or finds a settlement, the transaction is now going to happen,” said Mark Kelly, an analyst with financial firm MKP Advisors.

Since the announcement of the US-multi-billion takeover of Hess, there have been several new developments in relation to Hess’ most valuable asset in Guyana – the Stabroek Block – Hess Guyana holds a 30% interest in the oil block.

The operator of the block, ExxonMobil and CNOOC have both moved to arbitration, filing their case at the International Chamber of Commerce in Paris, arguing that it has a right of first refusal over Hess’ stake. Exxon holds a 45% interest in that block, and CNOOC with 25% interest.

Darren Woods, the CEO of Exxon has said that his company is trying to secure preemption rights over Hess Corporation’s Guyana assets (the 30% stake) in its dispute with Chevron. He clarified that Exxon was not trying to buy over Hess Corporation. For their part, Hess and Chevron have said they disagree with Exxon’s interpretation of the Joint Operating Agreement (JOA) that governs the Exxon, Hess and CNOOC consortium governing the Stabroek Block.

The fight over Guyana’s Stabroek Block resources finds its genesis in the lopsided oil deal signed by the APNU+AFC Coalition administration back in 2016. This deal extends favourable terms to the oil companies, providing unlimited tax waivers, uncapped interest rates and perhaps the lowest royalty rates known to the industry, at a meager two percent. Production from the Stabroek Block developments sits above 600,000 barrels per day (bdp) – with Exxon having the Liza 1, Liza 2 and the Payara projects online. The oil companies have embarked on an aggressive drilling campaign in the Stabroek Block targeting three other developments: Yellowtail, Uaru and Whiptail projects. It should be noted that Yellowtail, Uaru and Whiptail have already been approved.

• Chevron, company, Hess, majority, shareholders