Chevron buys Hess for $60B as Big Oil deals reshape industry
U.S. oil industry consolidation is suddenly happening at breakneck speed.
Driving the news: This morning Chevron announced an all-stock deal to buy Hess Corp. for $53 billion, with a total deal value of $60B including debt. It comes on the heels of Exxon's blockbuster Oct. 11 deal to buy Pioneer Natural Resources in an even larger transaction.
Why it matters: The deals (if regulators bless them) are reshaping the American industry as the two largest U.S. companies, flush with cash after a long stretch of high prices, snag giant independents.
State of play: Chevron's deal has big differences with Exxon's.
- While Pioneer operates in the Permian Basin, Hess has operations in North Dakota's shale patch, as well as the offshore Gulf of Mexico.
- It's a multinational player too, a huge part of the deal.
- Hess has developments offshore Guyana — a major new oil frontier where Exxon is a major presence — and gas operations in the Gulf of Thailand.
The big picture: Exxon and Chevron are making big bets on robust and enduring oil and gas demand despite climate policies.
- Chevron said the merged firm "is expected to grow production and free cash flow faster and for longer than Chevron's current five-year guidance."
What they're saying: "While Hess is based in the U.S., the real prize in the portfolio is Guyana where in less than a decade, the country has vaulted into one of the most important growth areas for non-OPEC oil production," Third Bridge analyst Peter McNally said in emailed remarks to reporters.
What we're watching: How much more consolidation looms.
The bottom line: Dominoes are falling.