News Americas, NEW YORK, NY, Weds. May 29, 2024: The stage is set for a major oil showdown over Guyana as Hess Corporation shareholders approved the $53 billion acquisition by Chevron on Tuesday. However, the deal’s timeline remains uncertain due to a dispute with Exxon Mobil over Hess’ assets in Guyana.
A majority of Hess shareholders voted in favor of the merger, though the exact tally was not disclosed. CEO John Hess expressed confidence in the transaction’s value and anticipated its successful completion.
The deal faces potential jeopardy as Exxon claims a right of first refusal on Hess’ 30% stake in the Stabroek Block, a significant offshore oil field in Guyana. Exxon, which leads the development with a 45% stake, filed for arbitration in March to assert its rights under the joint operating agreement. The remaining 25% stake is held by China National Offshore Oil Corp.
Chevron and Hess informed investors that the merger could be terminated if Exxon prevails in arbitration. Hess stated that the deal’s completion hinges on the resolution of these proceedings, with both companies aiming to finalize the merger “as soon as practicable.”
Chevron spokesperson Bill Turenne expressed confidence that the arbitration will favor Chevron, while Exxon CEO Darren Woods remains optimistic about Exxon’s position, anticipating arbitration to extend into 2025.
The merger, initially expected to close in the first half of 2024, is delayed due to the ongoing arbitration. Additionally, the deal is under scrutiny by the Federal Trade Commission.
Institutional Shareholder Services (ISS) advised shareholders to abstain from the vote until more details on the arbitration timeline emerge, while Glass Lewis recommended voting in favor, citing the strategic and financial merits of the merger despite the uncertainty.
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