US oil giant Chevron to buy rival Hess for $53 bn

US oil giant Chevron to buy rival Hess for $53 bn

US energy giant Chevron will buy its rival Hess for $53 billion in an all-stock deal
US energy giant Chevron will buy its rival Hess for $53 billion in an all-stock deal. Photo: Robyn Beck / AFP
Source: AFP

US energy giant Chevron will buy its rival Hess for $53 billion in an all-stock deal, the companies announced in a joint statement on Monday.

The mega-acquisition is the latest consolidation in the US energy sector, coming less than two weeks after the announcement that ExxonMobil would acquire Texas shale producer Pioneer for about $60 billion.

Chevron's deal values Hess's equity at $53 billion, while the total enterprise value of the transaction, including debt, is $60 billion, according to the statement.

The acquisition will further diversify Chevron's interests, with Hess's assets including an offshore exploration scheme in oil-rich Guyana and a major shale project in North Dakota, along with assets in the Gulf of Mexico and Gulf of Thailand.

The deal "positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets," Chevron chairman and CEO Mike Wirth said.

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Hess CEO John Hess also welcomed the deal.

"This strategic combination brings together two strong companies to create a premier integrated energy company," said Hess, who is expected to join Chevron's board of directors.

"I am proud of our people and what we have achieved as a company, which has one of the industry's best growth portfolios including Guyana, the world's largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer," he added.

With the deal, Chevron will acquire 30 percent ownership in more than 11 billion barrels of oil equivalent expected from the block in Guyana, along with holdings in the North Dakota Bakken shale field, according to the statement.

The deal comes at a time when crude is trading above $87 per barrel, a historically high level, which is boosting the profits of oil majors.

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Chevron last year posted a record profit of $35.5 billion. Hess posted a net profit of $2.2 billion for 2022.

In electronic trading before the opening of the New York Stock Exchange, Chevron stock was down 3.4 percent at $161.1 while Hess was up 1.15 percent at $164.9.

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Source: AFP

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