The arbitrators for a dispute between Exxon and Hess Corp. have reached a decision, according to two unnamed sources who spoke to Reuters but did not divulge details about that decision. It remains unclear when the decision will be made public.
The dispute between the two concerns the latter’s stake in the Stabroek Block in Guyana, which has yielded a string of oil discoveries since the start of exploration, giving Exxon and Hess—along with their partner CNOOC—access to over 11 billion barrels in recoverable crude. Exxon holds a 45% stake in the consortium, while Hess Corp. has 30%. 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.
Relations soured, however, after Chevron approached Hess with an acquisition offer worth $53 billion and Hess said yes. Soon after the agreement was made public, Exxon said its partnership terms with Hess Corp. give it—and CNOOC—the right of first refusal to the acquisition of Hess Corp.’s stake in the Stabroek Block. Per Chevron and Hess itself, the right of first refusal does not apply because the deal with Chevron is for the whole company and not only for its Guyanese assets.
The dispute was taken to the International Chamber of Commerce, based in Paris, which is currently reviewing its decision before making it public, Reuters reported. The decision would determine whether Chevron would go ahead with its acquisition of Hess Corp. or change its mind, given that the Guyanese assets are the crown jewel in the target company’s assets.
Meanwhile, as the arbitrators deliberated, Chevron has been buying stock in Hess Corp, signaling the takeover is going as planned. Since the start of the year, the supermajor has acquired close to 5% in Hess, worth around $3.2 billion. Perhaps even if the merger falls through, Chevron could gain some access to the Guyana operations, albeit indirectly.
By Irina Slav for Oilprice.com
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