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With eyes on Guyana, Chevron buys 5% of Hess shares
—–says it is confident of merger
Kaieteur News- With its eyes firmly fixed on Hess Corporation’s 30% stake in the ExxonMobil-led Stabroek Block operations, Chevron has bought a stake of 4.99% in Hess Corp, since the start of the year, according to a regulatory filing from this week.
Chevron said it is confident its merger with Hess will be realised
The company said it is confident that its merger with ExxonMobil’s partner in Guyana will proceed as planned, Reuters reported. The stake Chevron bought over the last two months cost about US$3.2 billion, the report noted, representing a total of 15.38 million common shares in Hess Corp.
Chevron announced plans to acquire Hess for some US$53 billion in one of a series of so-called megadeals that began in 2023, amid the war-driven rally on oil and gas prices. The announcement, made in October of that year, followed closely the news that Exxon had agreed to take over Pioneer Natural Resources in a deal worth US$59.5 billion, to become the leader in the Permian.
For Chevron, the appeal of Hess Corp lay in its Guyana assets, where, along with ExxonMobil, the company tapped as much as 11 billion barrels of oil equivalent, with production quickly ramping up. Currently, the South American nation pumps some 660,000 bpd, all from the Exxon-Hess operated Stabroek Block. Output is projected to hit 1.3 million barrels daily by 2030.
It is also ExxonMobil that is making the completion of the Chevron-Hess merger difficult, as it seeks the right of first refusal for Hess’ Guyana assets, turning to an arbitration court. Chevron and Hess insist that this is not an asset acquisition deal, so the right of first refusal clause in the partnership deal between Exxon and Hess does not apply. ExxonMobil begs to differ and it has the third partner in the Stabroek Block on its side—China’s CNOOC.
Hess Corp has a 30% stake in the Stabroek Block and Chevron has made no secret of the fact that this stake is the main reason it wants to acquire the company. Yet, ExxonMobil is also eyeing that stake, to add to its 45% in the project. If Exxon wins, the Hess acquisition would become pointless for Chevron.
President Irfaan Ali, back in May 2024, had said he would welcome Chevron joining the ExxonMobil-led consortium that operates the country’s US$150bn-plus offshore oil project. Ali had told the Financial Times that his government was keen to attract the world’s largest oil companies, such as Chevron, to develop its resources and suggested any move by Exxon to increase its stake in the project could raise competition concerns. “I wouldn’t use the word nervous,” Ali said when asked whether he was anxious about the possibility of Exxon gaining a more dominant stake in the project.
He noted that consolidation in other sectors that led to one business controlling more than half of the market “can cause concern”, saying, “We are of the view that the partnership works well.” Ali said the proposal to bring in a major new partner into the consortium was a matter for the existing partners, but added that he thought it would be good to have the “largest operators from the US operating in Guyana.” Back in January, this newspaper reported John Hess, the Chief Executive Officer (CEO) of Hess Corporation, saying that the Guyanese government strongly endorsed Chevron’s anticipated entry into the Stabroek Block. Speaking at the Goldman Sachs Research: Energy, CleanTech & Utilities Conference, Hess said President Irfaan Ali has made it clear that maintaining a three-way partnership for the block is critical. “The government’s been clear they want a three-way partnership to continue. They don’t want a two-way partnership to own the asset,” Hess outlined. He continued, “So President Ali has been very clear about that, he’s gone public, he’s been in the Financial Times speaking about that and he’s very supportive of Chevron becoming the third party in the country.”
(With eyes on Guyana, Chevron buys 5% of Hess shares)
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