Chevron is to buy Hess Corp for $53 billion and that’s a huge deal. Chevron Corporation (NYSE:CVX) has announced an all-stock transaction to buy Hess Corporation (NYSE:HES) in a deal valued at $53 billion or $171 per share, based on Chevron share price at closing on October 20, 2023. Deal price between Chevron and Hess Corp marks a premium of 10.3% on a 20-day average based on closing stock prices on October 20, 2023.
Chevron to buy Hess Corp
Chevron said on Monday it will buy smaller rival Hess in a $53 billion all-stock deal, as the oil major, Chevron looks to increase its footprint in oil-rich Guyana.
The deal puts two of the top oil giants, Chevron and Exxon Mobil, head-to-head in two of the world’s fastest-growing oil basins – shale and Guyana.
Guyana popular oil basin
Guyana has become a major oil producer in recent years after huge discoveries by Exxon Mobil, its partner Hess and China’s CNOOC, which together produce 400,000 bpd from two offshore vessels and have said they could develop up to 10 offshore projects.
Hess acquisition grows Chevron’s portfolio
Under the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share, resulting in a total enterprise value of $60 billion, including debt.
This acquisition will enhance and diversify Chevron’s portfolio, with a particular focus on the Stabroek block in Guyana, known for its strong cash margins and low carbon intensity, which is expected to drive production growth into the next decade, Chevron said.
“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” said Chevron Chairman and CEO Mike Wirth.
Chevron and Hess combined stronger
The addition of Hess’ Bakken assets will strengthen Chevron’s position in U.S. shale, complementing its operations in the DJ and Permian basins and contributing to domestic energy security.
The combined company is projected to achieve faster and more prolonged production and free cash flow growth compared to Chevron’s current five-year guidance. John Hess is expected to join Chevron’s Board of Directors as part of this transaction.
“This strategic combination brings together two strong companies to create a premier integrated energy company,” CEO John Hess said.
Chevron and Hess deal
The transaction between Chevron and Hess has been unanimously approved by the Boards of Directors of both companies and is expected to close in the first half of 2024.
The combined company is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance, the companies said.
“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,” Chevron’s CFO Pierre Breber said in a statement.
The deal comes weeks after rival Exxon made a $60 billion offer for Pioneer Natural Resources that would make it the biggest producer in the largest U.S. oilfield.
Stock update
Chevron share price fell 2.6% while Hess stock added 3% in early Monday trade.
