Chevron, one of the largest US energy companies, is set to acquire its American rival, Hess, in a monumental $60 billion deal, marking a significant shift in the US energy landscape. The acquisition emphasizes the drive among top US energy companies to secure oil and gas assets, as they seek lower-risk fossil fuel supplies and increased returns for shareholders.
This move intensifies the competition between Chevron and Exxon, with Chevron now joining Exxon in Guyana’s rapidly growing oilfields, expected to produce 1.2 million barrels of oil daily by 2027. Exxon had previously acquired Pioneer Natural Resources and Denbury in multi-billion dollar deals, positioning itself as a major player in US shale and carbon storage.
The decision to consolidate comes as US oil and gas companies capitalized on strong energy prices and demand following geopolitical events like Russia’s invasion of Ukraine. Chevron will acquire Hess at a premium, offering 1.025 of its shares for each Hess share held, indicating a 4.9% premium. The deal is expected to close in the first half of 2024 and faces regulatory reviews. John Hess, CEO of Hess Corp, will join Chevron’s board, and the partnership is anticipated to generate about $1 billion in cost synergies within a year of completion.
This merger represents a strategic response to the changing global energy landscape and the growing importance of Guyana’s oil resources.