Chevron Completes Acquisition of Hess Following Court Victory Over Exxon
American Chevron, as promised, closed the deal to acquire its competitor Hess within 48 hours after the International Chamber of Commerce (ICC) arbitration ruled in favor of Chevron in the case filed by ExxonMobil and CNOOC regarding pre-emptive rights to purchase Hess’s 30% stake in the Stabroek Block in Guyana, according to Reuters.
The deal had been delayed for over a year due to arbitration claims from Exxon and Chinese CNOOC, who are partners with Hess in the Guyana project. They insisted that they should be offered the 30% Hess stake first. Chevron and Hess maintained that the acquisition was of the entire Hess company, not just a specific asset. Experts note that the dispute centered around the interpretation of just a few words in the confidential partnership agreement between Exxon, Hess, and CNOOC.
Since Reuters reported it as a win, the ICC tribunal evidently sided with the merging companies. The ICC arbitration procedure does not allow for appeals.
Exxon stated that it disagreed with the decision of the ICC arbitration panel, but respects the arbitration process. Exxon CEO Darren Woods said the company is reviewing the arbitration ruling to determine whether future contracts should include clearer language to protect its pre-emptive rights. He added that relations with Chevron on other projects remained cooperative.
While arbitration was ongoing, Chevron had been preparing to close the deal with Hess within 48 hours of the court decision and to finalize operational matters within 45 days. Teams from Chevron and Hess were already working on integration plans, including IT systems, and Hess employees were informed about potential severance programs.
This acquisition — one of the largest in the energy sector in the past 10 years — is a key component of Chevron CEO Mike Wirth’s strategy to improve company performance. The main “prize” of the deal is Hess’s stake in the highly promising Guyanese oilfield, considered one of the fastest-growing petroleum provinces in the world.
“NiK”: This legal battle clearly highlights the enormous value of the Stabroek Field. It already generates substantial profits for the Exxon-led consortium, has transformed Guyana into one of the world’s fastest-growing economies, and still holds potential for new oil discoveries. Hess’s profit from the Guyana project has grown significantly over the past year, while Chevron’s adjusted earnings for the same period have declined.
