Energy
Tuesday, February 27th, 2024 4:07 pm EDT
Key Points
- Hess Corp shares fell on Tuesday due to concerns raised by Chevron regarding a dispute with Exxon Mobil and Cnooc over Guyana’s offshore oil assets, potentially jeopardizing Chevron’s bid to acquire Hess.
- Chevron’s warning came as it entered into an agreement to purchase Hess for $53 billion in an all-stock transaction, primarily to gain access to Guyana’s substantial offshore oil assets.
- The dispute centers around Exxon and Cnooc’s claim of a pre-emptive right to purchase Hess’s stake in Guyana’s assets under a joint operating agreement, which Chevron believes may delay or derail the acquisition. Discussions are ongoing to resolve the issue, but if the merger fails, Hess would continue to operate independently while retaining its stake in Guyana’s assets.
Hess Corp faced a significant drop in its shares as Chevron, which had agreed to acquire Hess for $53 billion in an all-stock transaction, warned investors of a potential roadblock. The dispute arises from Guyana’s offshore oil assets, where Hess holds a 30% stake in a consortium with Exxon and Cnooc. Chevron cautioned that Exxon and Cnooc claim a pre-emptive right to purchase Hess’s stake under a joint operating agreement, potentially derailing the acquisition. While Chevron contends that the agreement doesn’t apply to its acquisition, discussions are ongoing to resolve the conflict. Analysts, including Neal Dingmann, express skepticism that Exxon and Cnooc will acquire Hess’ assets, suggesting either the transaction proceeds or Hess retains control. The situation adds to challenges for Chevron’s bid, which already faces scrutiny from the Federal Trade Commission over competition concerns.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/27/hes-shares-drop-as-fight-with-xom-over-guyana-oil-threatens-chevron-takeover.html
