All-Stock Deal: Chevron Buys Hess Corp

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Chevron Corporation (CVX.N) has agreed to acquire Hess Corporation (HES.N) for $53 billion in stock. The acquisition will give Chevron a larger U.S. oil footprint and a significant stake in Exxon Mobil Corporation’s (XOM.N) Guyana discoveries. This is the latest in a series of major oil deals in the United States. The two largest U.S. oil producers have recently agreed to more than $110 billion in deals that will add years of oil output, much of it from U.S. shale. These deals will leave European rivals, that had shifted their focus to renewable energy, further behind in fossil fuels.


Chevron CEO, Michael Wirth, who has recently acquired U.S. rivals PDC Energy and Noble Energy to bulk up its shale oil and gas holdings, said, “This is great for energy security: It brings together two great American companies.” The combination of Hess, PDC, and Noble will bring Chevron’s total oil and gas output to about 3.7 million barrels per day (bpd). It will expand Chevron’s shale output by 40% and put it neck and neck with Exxon’s projected 1.3 million bpd shale output following its Pioneer Natural Resources acquisition.


The deal gives Chevron a significant stake in Guyana, where it will become a 30% owner of an Exxon-operated field expected to produce more than 1.2 million bpd by 2027. Chevron operates in Guyana’s neighboring countries, Venezuela and Suriname.


Shares sold off in midday trading on Monday with Chevron down 2.6% at $162.46 and Hess falling a fraction, to $162.45. “This deal is all about the world-class Guyana asset, which is by far the crown jewel in the Hess portfolio,” wrote Capital One Securities analysts in a note.


Chevron said it plans to sell between $15 billion to $20 billion in assets following the latest acquisition and plans to spend between $19 billion and $21 billion on major projects.

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