Chevron Corporation has reinforced its commitment to acquiring Hess Corporation by purchasing 15.38 million shares of Hess’ common stock in open market transactions between January and March 2025. The purchase, conducted at prevailing market prices, was disclosed in a regulatory filing with the U.S. Securities and Exchange Commission (SEC).
The newly acquired shares represent approximately 4.99% of Hess’ outstanding common stock as of January 31, 2025, based on the company’s annual report. At today’s share price, that is valued at about US$2.31 billion. Chevron said the shares were purchased at a discount compared to the exchange ratio implied in the merger agreement between the two companies, which was established in 2023. On March 17, the oil major stated that this move reflects its ongoing confidence in the pending acquisition.
A key hurdle remains in the form of an ongoing arbitration concerning Hess’ joint operating agreement (JOA) with ExxonMobil and CNOOC for the Stabroek Block offshore Guyana. The arbitration centers on whether a right of first refusal (ROFR) provision in the JOA applies to the merger. If the arbitrators rule that the provision is applicable, ExxonMobil and CNOOC could have the right to acquire Hess’ 30% stake in the block instead of Chevron.
The arbitration merits hearing is set for May 2025, with a decision expected within approximately three months. Chevron acknowledged in its latest annual report that an unfavorable ruling, or a failure among the involved parties to reach an acceptable resolution, would lead to the termination of the merger. Specifically, if the arbitration confirms the applicability of the ROFR clause and no agreement is reached among the parties, a key closing condition in the merger agreement would not be met, preventing the transaction from proceeding, Chevron said.
The Federal Trade Commission (FTC) previously reviewed the proposed Chevron-Hess transaction and, on September 30, 2024, announced that the majority of the Commission voted to accept a consent agreement among the parties, resolving regulatory concerns about the transaction.
For Chevron, the strategic appeal of acquiring Hess is closely tied to the significant oil and gas resources under Hess’ portfolio in Guyana. A key valuation driver is the estimated 11 billion barrels of oil equivalent (boe) discovered in the Guyana Stabroek Block by ExxonMobil. The Hess partner has ramped up production significantly, increasing from first oil in December 2019 to over 600,000 barrels per day (b/d) in 2025. By the end of the decade, oil production could reach 1.6 million b/d.
Beyond oil, the acquisition would expand Chevron’s natural gas footprint. Exxon’s gas production could reach 1.5 billion standard cubic feet per day (bscf/d) by 2030.
