Feb 27, 2024 - Energy & Environment

Exxon eyes spoiler role in Chevron-Hess deal

Illustration of an oil barrel as a vintage microphone

Illustration: Sarah Grillo/Axios

Exxon and its Chinese partner in Guyana may try and exercise their ability to obtain Hess' stake in a massive offshore field there.

Why it matters: There's suddenly a dash of uncertainty around Chevron's blockbuster $53 billion deal to acquire Hess, a company coveted partly for its Guyana holdings.

State of play: Chevron disclosed in a filing that Exxon and China's CNOOC believe they have a right of first refusal on Hess' Stabroek block holdings, which Chevron is disputing.

  • Chevron said if there's no acceptable resolution and potential arbitration doesn't resolve things, the merger might not close.
  • But the filing lays out Chevron's and Hess' view that the merger structure, and Hess' Stabroek agreement with the two others, doesn't allow preemption.

Threat level: The deal isn't expected to be delayed or scuttled, Chevron says in the filing, which adds "constructive discussions" are ongoing.

  • Chevron added in a statement that there's "no possible scenario in which Exxon or CNOOC could acquire Hess' interest in Guyana" because of the merger.

Yes, but: "We owe it to our investors and partners to consider our pre-emption rights in place under our Joint Operating Agreement to ensure we preserve our right to realize the significant value we've created and are entitled to in the Guyana asset," Exxon said.

What's next: Early market reaction suggests it's probably not a crisis. Chevron's stock barely moved in after-hours trading, while Hess fell by over 3.4% (hardly a freefall). But it's absolutely something to watch.

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