Chevron has completed the $53bn acquisition of Hess, following the fulfilment of all necessary closing conditions.
The development follows a favourable arbitration outcome regarding Hess’ offshore asset in Guyana.
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This strategic move consolidates Chevron’s position in the global energy market with a highly advantaged and differentiated portfolio.
The acquisition introduces premier assets to Chevron’s portfolio, including the Guyana Stabroek Block and the US Bakken formation.
Additionally, the Federal Trade Commission (FTC) reversed its prior restriction, allowing John Hess to join Chevron’s Board of Directors, pending Board approval.
Chevron chairman and CEO Mike Wirth said: “This merger of two great American companies brings together the best in the industry.
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By GlobalData“The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders. Additionally, I am pleased with the FTC’s unanimous decision. John is a respected industry leader, and our Board would benefit from his experience, relationships and expertise.”
Chevron has gained a 30% stake in the Stabroek Block in Guyana, which boasts more than 11 billion barrels of oil equivalent in discovered recoverable resources.
Additionally, Chevron now controls 463,000 net acres in the Bakken, as well as complementary assets in the Gulf of America producing 31,000 barrels of oil equivalent per day (boepd) and natural gas assets in South East Asia with 57,000boepd.
Hess CEO John Hess said: “We are proud of everyone at Hess for building one of the industry’s best growth portfolios including Guyana, the world’s largest oil discovery in the last ten years, and the Bakken shale, where we are a leading oil and gas producer.
“The strategic combination of Chevron and Hess creates a premier energy company positioned for the future.”
Under the merger agreement’s terms, Hess shareholders will receive 1.0250 Chevron shares for each Hess share, resulting in Chevron issuing approximately 301 million shares of common stock from its treasury.
Chevron-owned shares of Hess stock, amounting to 15.38 million shares, were cancelled without consideration at the closing of the transaction.
The acquisition is expected to be accretive to Chevron’s cash flow per share in 2025, following the realisation of synergies and the start-up of a fourth floating production storage and offloading vessel in Guyana.
It is expected to increase Chevron’s production and free cash flow growth rates over the next five years and extend this growth into the 2030s.
Chevron’s combined capital expenditure budget is projected to range from $19bn to $22bn.
Post-acquisition, the company aims to maintain a double-digit return on capital employed at mid-cycle prices and achieve run-rate cost synergies of $1bn by the end of 2025.
