On Monday, Chevron Corporation made a groundbreaking announcement of its acquisition of competitor Hess Corporation in an all-stock transaction valued at an impressive $53 billion. According to the energy giant, this move serves to bolster Chevron’s already robust portfolio by enhancing its diversity and overall strength.
In a public statement, Chevron emphasized the significance of the Stabroek block in Guyana as a valuable asset, boasting exceptional cash margins and a notably low carbon footprint, with projected production growth well into the next decade. The addition of Hess’ Bakken assets further solidifies Chevron’s position in the U.S. shale sector, complementing its existing operations in the DJ and Permian basins and reinforcing the nation’s energy security.
The amalgamated entity is anticipated to experience accelerated production growth and increased free cash flow, surpassing Chevron’s current five-year projections. The acquisition, expected to conclude in the first half of the following year, has received unanimous approval from the boards of both companies.
Despite this positive development, shares of both companies experienced a slight dip in pre-market trading on Monday morning. As part of the agreement, Hess CEO John Hess is set to join Chevron’s Board of Directors, further solidifying the collaborative nature of this venture.
However, the deal is subject to the consent of Hess shareholders and regulatory authorities before finalization. Chevron’s Chairman and CEO, Mike Wirth, expressed confidence in the strategic significance of this move, highlighting the potential for long-term performance enhancement and an enriched portfolio through the integration of top-tier assets.
John Hess, the CEO of Hess Corporation, also expressed his pride in the company’s achievements, citing its notable growth portfolio, including the landmark discovery in Guyana, which stands as the largest oil find in the past decade, and the leading role in the Bakken shale production.
Recognizing Chevron’s strengths, including its diversified asset portfolio and robust financial standing, Hess underscored the belief that this collaboration would create a unified entity poised to lead the industry through the ongoing energy transition while generating substantial value for shareholders in the years to come.
