Chevron to acquire Hess Corp in $53 billion all-stock deal
Chevron Corp will acquire smaller competitor Hess Corp in an all-stock transaction valued at $53 billion (Rs. 4.4 lakh crore). Chevron will offer $171 per Hess share, representing a 4.9% premium on the stock's previous closing price. This development comes on the heels of Exxon's $60 billion (Rs. 4.99 lakh crore) bid for Pioneer Natural Resources, which could potentially make it the largest producer in the biggest US oilfield.
Expansion into oil-rich Guyana
Hess Corp's acquisition will allow Chevron to expand its presence in the oil-rich region of Guyana, positioning it as a direct competitor with Exxon Mobil in two of the world's most rapidly growing oil basins: shale and Guyana. In recent times, Guyana has emerged as a major oil producer due to substantial discoveries by Exxon Mobil, Hess, and China's CNOOC. Collectively, these companies produce 4,00,000 bpd from two offshore vessels and have plans to develop up to 10 offshore projects.
Combined company's growth and cash flow
The merged entity of Chevron and Hess Corp is projected to increase production and free cash flow at a faster rate and for a longer duration than Chevron's current five-year guidance. "With greater confidence in projected long-term cash generation, Chevron intends to return more cash to shareholders with higher dividend per share growth and higher share repurchases," stated Chevron's CFO Pierre Breber. The transaction is expected to be finalized around the first half of 2024.
