In a significant move that underscores the ongoing consolidation within the energy sector, Chevron Corporation has announced its acquisition of Hess Corporation in an all-stock transaction valued at $53 billion. This acquisition is set to diversify and upgrade Chevron's already robust portfolio, marking a pivotal moment in the energy industry's landscape.
The deal, which has been unanimously approved by the boards of directors of both companies, is expected to close in the first half of the upcoming year, pending approval from Hess shareholders and regulatory bodies. The transaction values each share of Hess at $171, based on Chevron's closing price as of October 20, 2023.
One of the primary attractions for Chevron in this acquisition is the Stabroek block in Guyana. This block is recognized as an extraordinary asset with industry-leading cash margins and a low carbon footprint. It promises to deliver consistent production growth well into the next decade. Additionally, Hess's assets in the Bakken region will complement Chevron's operations in the DJ and Permian basins, further bolstering domestic energy security.
Chevron's Chairman and CEO, Mike Wirth, emphasized the strategic importance of this acquisition, stating, "This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets." He also highlighted the shared values and cultures of the two companies, emphasizing their commitment to safety, integrity, community contributions, and delivering higher returns with a reduced carbon footprint.
John Hess, the CEO of Hess Corporation, is expected to join Chevron's Board of Directors post-acquisition. Expressing his pride in what Hess Corporation has achieved, he mentioned the company's significant growth portfolio, including its operations in Guyana and the Bakken shale. He believes that the merger with Chevron, given its diversified asset portfolio and strong financial standing, will lead the way through the energy transition and offer substantial shareholder value for the foreseeable future.
This acquisition comes at a time when the energy sector is witnessing rapid changes, with companies looking to consolidate and strengthen their positions. The combined strengths of Chevron and Hess are expected to set new industry standards and pave the way for future growth and innovation.
