Chevron Announces Agreement to Acquire Hess
Transaction valued at $53 billion, or $171 per share
Dear Readers,
As you know, we have been bullish on offshore since last year. In addition, we were critical of the ExxonMobil merger with Pioneer Natural Resources. Moving investment from long-cycle reserves to short-cycle reserves does not make sense. It is clear that Chevron understands this point.
“Chevron Corporation (NYSE: CVX) announced today that it has entered into a definitive agreement with Hess Corporation (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The total enterprise value, including debt, of the transaction is $60 billion.”
More details in this link: Chevron Announces Agreement to Acquire Hess
We highlighted the problems with the ExxonMobil/Pioneer merger in this article:
Why a Deal between Exxon and Pioneer is Bad for the Oil Industry
The only problem we see here is that the $53 billion is not a new investment. It does not bring additional new reserves nor new p[production. We do not believe that Chevron will bring higher growth than what Hess would have done anyway.
The risk from now on for both ExxonMobil and Chevron is in Guyana. Will Guyana defy historical trends and maintain its good relations with international oil companies? Or will we see increased nationalism, just like other countries, that will bring a left-leaning nationalistic government that will ask for a higher share or even flat-out nationalism? The history of the oil industry tells us that we cannot ignore this possibility.
