THE US Federal Trade Commission (FTC) is expected to greenlight US oil producer Chevron’s purchase of Hess as soon as this week, two sources familiar with the matter said, leaving ExxonMobil’s challenge to the US$53 billion deal as its final hurdle.
The proposed merger was first announced last October, and the FTC sent a second information request to Chevron two months later. Hess shares were up as much as 3 per cent in after-hours trading on Monday (Sep 23) following the news.
Uncertainty over the deal’s closing has knocked Chevron shares down 1 per cent this year compared to a 6.5 per cent increase in energy share fund XLE.
ExxonMobil and China National Offshore Oil Corporation (CNOOC), Hess’s partners in a Guyana joint venture, are challenging the deal by claiming a right of first refusal to any sale of Hess’s Guyana assets, the prize in the proposed merger.
A three-judge arbitration panel is due to consider the case in May 2025. Chevron and Hess said a decision is expected by August, while ExxonMobil expects it by September 2025.
The proposed all-stock acquisition is one of the largest in a consolidating US oil and gas industry where several multi-billion US dollar deals have been disclosed.
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Chevron’s announcement of the Hess deal followed ExxonMobil’s US$60 billion purchase of US shale giant Pioneer Natural Resources, which closed in May.
Two other mergers, Occidental Petroleum’s deal for CrownRock and Diamondback Energy’s bid for Endeavor Energy Resources, have closed even though they came after the Chevron-Hess combination.
The FTC required ExxonMobil to withdraw its offer of a board seat to Pioneer Natural Resources CEO Scott Sheffield as a condition for its go-ahead. The FTC alleged he colluded with Opec to reduce US oil and gas output to potentially raise the price of oil.
Sheffield denied the allegations and has asked the FTC to vacate its ban on his taking an ExxonMobil board seat.
A spokesperson for the FTC declined to comment on Monday.
ExxonMobil arbitration
The dispute over terms of the contract governing the ExxonMobil-CNOOC-Hess partnership stalls any closing to the second half of 2025. The Guyana consortium controls one of the world’s fastest-growing and lucrative oil provinces with more than 11.6 billion barrels of recoverable oil and gas discoveries since 2015.
ExxonMobil operates all production in Guyana with a 45 per cent stake in an offshore oil production consortium with Hess and China’s CNOOC, as minority partners. Combined earnings for the trio from Guyana last year were US$6.33 billion on US$11.25 billion in revenue.
The information was first reported by CTFN, a data and news provider to financial professionals. REUTERS
