Chevron Corporation has successfully completed its $55 billion acquisition of Hess Corporation, gaining access to the largest oil discovery in decades. The acquisition, one of the largest energy deals in the past decade, hinges on Hess’s stake in the prolific Stabroek Block off the coast of Guyana, which holds more than 11 billion barrels of oil and is one of the fastest-growing oil provinces in the world.
“This merger of two great American companies brings together the best in the industry,” Chevron CEO Mike Wirth said in a statement. Wirth’s strategy to turn around Chevron’s lagging performance relied heavily on this acquisition. The deal is expected to drive significant free cash flow and production growth into the 2030s, achieving run-rate cost synergies of $1 billion by the end of 2025.
The acquisition process was delayed for over a year due to arbitration disputes filed by Exxon Mobil and China’s CNOOC, Hess’s partners in Guyana. They claimed to hold a pre-emptive right to purchase Hess’s stake, sparking a lengthy legal battle that drew attention from the global oil industry, shareholders, and attorneys. The dispute centered on the interpretation of specific words in the confidential joint operating agreement between Exxon, Hess, and CNOOC.
“We disagree with the International Chamber of Commerce panel’s interpretation but respect the arbitration and dispute resolution process,” Exxon said in a statement. “Given the significant value we’ve created in the development of the Guyana resource, we believed we had a clear duty to our investors to consider our preemption rights to protect the value we created through our innovation and hard work at a time when no one knew just how successful this venture would become.”
Despite the delay, Chevron prepared to close the deal quickly, with information technology workers from both companies meeting regularly to plan integration. Hess employees were informed that they could request a severance package following the deal’s close. Wirth expects converting technology and combining employees from both companies to take a few months.
The acquisition significantly enhances Chevron’s global portfolio with top-tier assets in Guyana and the U.S. Bakken, supporting its leadership in key energy markets. Chevron now holds a 30% stake in the Guyana Stabroek Block, containing over 11 billion barrels of oil equivalent in recoverable resources.
Hess’s earnings from Guyana rose to $3.1 billion last year from $1.9 billion in 2023. Chevron’s adjusted earnings last year totaled $18.3 billion, down from $24.7 billion in 2023. The acquisition is expected to be accretive to cash flow per share and extend growth into the 2030s.