Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Chevron Acquires Hess in $53 Billion Oil Megadeal Following Exxon's Pioneer Purchase
11/02/2023![Chevron-Acquires-Hess-in-53-Billion-Oil-Megadeal-Following-Exxon-s-Pioneer-Purchase](https://images2.rextag.com/public/blog/199Blog_Chevron to Acquire Hess for 53 Billion.png)
- Acquisition Value: $53 billion in an all-stock deal.
- Aim: To expand Chevron's U.S. oil footprint and stake in Exxon Mobil's Guyana discoveries.
- Post-Acquisition Output: Around 3.7 million barrels per day with a 40% increase in shale output to 1.3 million bpd.
- Notable Stake Acquired: 30% in the Exxon and CNOOC Stabroek oil block in Guyana, expected to yield more than 1.2 million bpd by 2027.
Chevron Corp has agreed to acquire Hess Corp in a $53 billion all-stock deal. This acquisition will not only enhance Chevron’s position in the domestic oil market but also fetch a substantial stake in Exxon Mobil's promising Guyana projects.
The Chevron-Hess deal is a part of a broader trend of consolidation in the U.S. oil sector. This merger comes on the heels of a massive $60 billion acquisition by Exxon earlier in the month. Both Chevron and Exxon aim to add many years of oil and gas production to their portfolios, majorly from U.S. shale. The deals have further widened the gap between U.S. and European oil giants, with the latter focusing more on renewable energy ventures of late.
“Building on our track record of successful transactions, the addition of Hess is expected to extend further Chevron’s free cash flow growth,” said Pierre Breber, Chevron’s CFO. “With greater confidence in projected long-term cash generation, Chevron intends to return more cash to shareholders with higher dividend per share growth and higher share repurchases.”
Boosting Production
Post-acquisition, Chevron's total oil and gas output is set to soar to about 3.7 million barrels per day. A significant portion of this increase, about 40%, will come from expanded shale output, taking it to 1.3 million barrels per day. This will place Chevron in a neck-and-neck competition with Exxon's projected shale output following its recent acquisition of Pioneer Natural Resources.
This merger will facilitate Chevron’s entry into less risky oil production regions by adding to its output in the U.S. Gulf of Mexico and initiating its presence in the Bakken shale in North Dakota. Moreover, Chevron will now hold a 30% stake in the Exxon and CNOOC Stabroek oil block in Guyana, with expectations of the output tripling to more than 1.2 million barrels per day by 2027.
“This strategic combination brings together two strong companies to create a premier integrated energy company,” CEO John Hess said. “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. Chevron has a world-class diversified portfolio of assets and one of the industry’s strongest balance sheets and cash return profiles. I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and deliver significant shareholder value for years to come.”
Financial Implications
Chevron has offered 1.025 of its shares for each Hess share, translating to about $171 per share, which implies a premium of about 4.9% to Hess's last stock close. Including debt, the total deal value stands at $60 billion. The deal, anticipated to close by the first half of 2024, is expected to generate about $1 billion in cost synergies within a year of its closure. Post-deal, Chevron plans to sell assets between $15 billion to $20 billion and allocate between $19 billion and $21 billion annually on major projects.
Climate Concerns
The acquisition, however, has not been received well by environmentalists, who argue that such consolidations within the fossil fuel industry undermine the climate goals set by the Paris Agreement. They caution that Big Oil needs to transition towards renewable energy to comply with global warming limits.
About Chevron
Chevron is a multinational energy corporation with a rich history stretching over 140 years, marked by human ingenuity and innovation. It has been a player in the development of energy resources across the globe, requiring a blend of talent and technical knowledge. The company has grown through acquisitions and exploration, continuously expanding its operations in the energy sector.
About ExxonMobil
ExxonMobil is at the forefront of meeting the world's universal energy needs by pioneering new research and technologies aimed at reducing emissions while creating more efficient fuels. The company has a global organization committed to responsibly addressing energy requirements, balancing the need for energy and reducing environmental impacts.
About Hess Corporation
Hess Corporation is an exploration and production (E&P) company primarily involved in the exploration, development, production, transportation, purchase, and sale of crude oil, natural gas liquids, and natural gas. With operations located in the United States, Guyana, the Malaysia/Thailand Joint Development Area (JDA), and Malaysia, Hess operates through two segments: E&P and Midstream. The E&P segment focuses on the exploration, development, production, purchase, and sale of crude oil, NGL, and natural gas.
If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
Hess Corp. Increases Drilling Activity Before Chevron Takeover
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/232Blog_Hess Corp. Increases Bakken Production Before Chevron Deal.png)
Hess Corp. is in the final stages of a major sale to Chevron, with increased drilling and production in the Bakken region noted in the last quarter. Hess announced its fourth-quarter net production in the Bakken reached 194,000 barrels of oil equivalent per day (boe/d), a slight increase from the third quarter's 190,000 boe/d and a significant 23% rise from the 158,000 boe/d seen in the fourth quarter of the previous year. This growth is attributed to more drilling and the impact of the previous year's severe winter weather.
Chevron to Sell Stake in Canada’s Duvernay Shale
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/227Blog_Chevron to Sell Canadian Shale Stake.png)
Chevron is selling its Canadian shale production operations as part of a wider plan to concentrate its investments on more profitable projects in the United States.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/297_Blog_Keystone XL Pipeline Controversy and Wildlife Disaster From Trump's Green Light to Biden's Red Light on the 15 Billion Project.jpg)
The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction. Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, President Obama rejected the project, citing concerns about its environmental impact. However, in 2017, President Trump revived the project, leading to further legal challenges. In June 2021, U.S. President Joe Biden officially canceled the project on his first day in office.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/282_Blog_Renewable Natural Gas How RNG Changes the Industry.jpg)
The renewable natural gas (RNG) industry in the United States is showing promising signs of growth. As of 2019, the U.S. consumed 261 billion cubic feet (BCF) of RNG, primarily utilized by independent power producers, electric utilities, and various commercial and industrial entities. However, this figure represents only a small fraction of its potential. Research indicates that the U.S. could theoretically produce up to 2,200 BCF of RNG through anaerobic digestion alone, which would equate to about 11% of daily national natural gas consumption.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/295_Blog_Renewable Efforts Lag as Global Oil and Gas Demand Continues to Rise.jpg)
Recently, the progress toward an energy transition is hitting a snag. Sales of electric vehicles are decelerating, and the growth in wind and solar power needs to be keeping pace with expectations. To make matters more challenging, electricity prices are climbing when they were expected to fall. Amidst these setbacks, the oil and gas sectors are proving resilient. According to BP's latest energy outlook, not only are these energy mainstays here to stay, but their demand is expected to remain relatively high even after reaching a peak. Interestingly, BP forecasts that oil demand will reach its zenith next year, marking a critical moment in energy consumption trends. This isn't the first time BP has projected a peak in oil demand. Back in 2019, their review anticipated a decline in demand growth, but the prediction fell flat. Instead, oil demand surged to unprecedented levels following the end of the global pandemic lockdowns, defying previous forecasts and underscoring the enduring dominance of traditional energy sources in the global market.