Chevron is preparing for a quick finalization of the Hess Crop. Acquisition, even as the two still await the decision of the arbitration court on Exxon’s right to first refusal on Hess’s stake in the Stabroek Block in Guyana.
Reuters reported the news, citing unnamed sources and “an industry analyst”, who said that Chevron was even working on severance packages for some Hess employees who would be let go after the tie-up.
Yet for that to happen, the International Chamber of Commerce needs to rule in Chevron’s favor. The dispute that the ICC ruled on earlier this month but has yet to make its decision public, concerns the Guyanese operations of Exxon, in which Hess Corp. is a minority partner with 30%. It is this 30 stake that Chevron is especially interested in, but, it turns out, so is Exxon.
Chevron announced its plans to acquire Hess for some $53 billion in late 2023. Yet the megadeal ran into an obstacle when Exxon said it had right of first refusal to Hess’s stake in the Stabroek Block. Hess and Chevron countered that such a clause would only be valid in a stake acquisition situation, while the two had a company acquisition situation. CNOOC, the third partner in Guyana, sided with Exxon.
The Stabroek Block has so far yielded estimated resources of some 11 billion barrels and there’s likely to be more. Production has been growing quickly and steadily, too, at around 660,000 bpd currently. Plans are to raise this to 1.3 million barrels daily by 2030.
Meanwhile, Chevron is buying Hess stock. The company was recently reported to have accumulated a stake of 5% in the target company, with the price tag at $2.3 billion. At the same time, the supermajor has appointed a team to take care of the integration of Hess’ operations into the larger entity once the deal s finalized, signaling it is confident the arbitration court will announce a favorable decision.
By Irina Slav for Oilprice.com
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