Chevron has completed its $53 billion acquisition of Hess Corp., a long-awaited development that gives the US supermajor a prized stake in Guyana’s rapidly expanding offshore sector. The all-stock transaction closed on 18 July following more than a year of regulatory and legal delays.
The deal cleared its final hurdle after an independent arbitration panel rejected ExxonMobil’s claim that it held a contractual right of first refusal over Hess’ interest in the Stabroek Block.
ExxonMobil had argued the clause applied to corporate takeovers, not just asset-level transactions. The arbitrators disagreed, allowing Houston-based Chevron to proceed with the multibillion-dollar acquisition.
Before being absorbed, Hess reported 2024 net income of $2.77 billion, more than doubling from $1.38 billion in 2023 thanks to increased production and stable crude prices. Companywide output averaged 481,000 BOE/D (79% liquids) last year, a 22% increase over the prior year.
Chevron reported an average production in 2024 of 3.3 million BOE/D, which could rise to around 4 million BOE/D by year end thanks to the addition of existing Hess projects and those about to come online offshore Guyana.
Chevron now holds a 30% nonoperating interest in the Stabroek Block, which contains more than 11 billion bbl of discovered recoverable resources. Production in 2024 from Hess’ share of the block averaged 186,000 B/D, up more than 60% year-over-year, according to the company’s latest annual report. The increase was driven by the start up of the block’s third floating production, storage, and offloading (FPSO) unit at the end of 2023.
Output from the block is expected to climb further with the addition of three new FPSOs capable of producing a combined 750,000 B/D by 2027. ExxonMobil has also submitted plans for what would be its seventh FPSO, with a capacity of 150,000 B/D, to be installed and commissioned by 2029.
“This merger of two great American companies brings together the best in the industry,” Chevron CEO Mike Wirth said in a statement. “The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders.”
In addition to Guyana, Chevron becomes a new entrant in North Dakota’s Bakken Shale, where Hess holds rights to 463,000 net acres. The New York City-based oil company operated four rigs last year in the Bakken and brought 131 new wells online. Net production from the play was up 12% year-over-year, reaching 204,000 BOE/D in 2024.
The deal also strengthens Chevron’s deepwater portfolio in the newly renamed Gulf of America, where Hess produced 31,000 BOE/D (75% liquids) in 2024. It also adds natural gas assets in Southeast Asia, which produced 60,000 BOE/D (95% gas) last year.
ExxonMobil Accepts the Outcome
The closing was delayed largely because of ExxonMobil’s contention that it had a right of first refusal on Hess’ Guyana stake. Exxon, the operator of the block, said in a statement, “We disagree with the [International Chamber of Commerce] panel’s interpretation but respect the arbitration and dispute resolution process.”
The fellow Houston-based supermajor’s statement continued: “Given the significant value we’ve created in the development of the Guyana resource, we believed we had a clear duty to our investors to consider our preemption rights to protect the value we created through our innovation and hard work at a time when no one knew just how successful this venture would become.”
Despite the dispute, ExxonMobil acknowledged Chevron’s new role in the venture.
“We welcome Chevron to the venture and look forward to continued industry-leading performance and value creation in Guyana for all parties involved,” the statement read.
One day before the arbitration ruling, the US Federal Trade Commission reversed course on an earlier decision that would have blocked Hess CEO John Hess, who has led the company for over 25 years, from joining Chevron’s board. With the reversal, he is now cleared to take his seat.
Chevron said it expects to realize $1 billion in annual synergies from the merger but has not yet shared plans for the Hess brand, its New York City headquarters, or its main engineering office in Houston.
Chevron’s acquisition of Hess follows two other major moves by the company to consolidate the US shale patch, including its $5 billion purchase of Noble Energy in 2020 and its $7.6 billion acquisition of PDC Energy in 2023.
