Hess in Process of Reviewing Closing Timeline for Chevron's Acquisition

Hess, a prominent oil producer headquartered in the United States (HES.N), made an announcement on Thursday, indicating a reevaluation of the timeline for finalizing its acquisition agreement with Chevron (CVX.N). This decision comes on the heels of communications from Exxon (XOM.N), a major player in the oil industry, hinting at the potential submission of a counteroffer for Hess's Guyana assets.

Exxon took formal action on Wednesday by filing an arbitration claim regarding Hess's proposed sale of its Guyana oil properties. This move suggests Exxon's contemplation of presenting a competing bid against Chevron's impending acquisition of these assets. The brewing dispute between these two prominent U.S. oil producers poses a significant risk to the completion of the Hess takeover deal, as cautioned by Chevron in a securities filing issued the previous month. In the unfortunate event of the dissolution of the deal, Hess may incur a substantial $1.7 billion breakup fee.

The primary objective behind Exxon's initiation of the arbitration case is to safeguard its right to explore the possibility of making an offer for Hess's 30% interest in the expansive Stabroek offshore oil block. This right is contingent upon Chevron's advancement with its planned $53 billion purchase of Hess. Concurrently, Exxon is nearing the finalization of its own $60 billion acquisition of Pioneer Natural (PXD.N), indicating a strategic maneuver to exploit the arbitration process as a means to delay the Chevron-Hess transaction. This delay tactic could potentially position Exxon to pursue a subsequent major deal with Hess.

Chevron's acquisition of Hess has already encountered hurdles, primarily due to a request from the U.S. Federal Trade Commission for additional information concerning the merger. Consequently, the anticipated closing date has been pushed back to at least the middle of the current year. Exxon's arbitration claim adds another layer of complexity to the situation, potentially prolonging the process further.

In response to these unfolding developments, Hess has relayed its disagreement with Exxon's interpretation of the agreement to its employees. In addition to this, the company has expressed confidence in its position and believes it will prevail in the arbitration proceedings.

Chevron, a prominent developer, manufacturer, and marketer of lubricant and fuel oil additives, stands as a key player in the industry. Furthermore, Chevron holds a leading position as a premium base oil producer. In addition to these ventures, Chevron Shipping Co. manages a fleet comprising crude tankers, product carriers, and liquefied natural gas (LNG) carriers.