Exxon Mobil Corp announced on Wednesday that it has initiated a contract arbitration claim in connection with Hess Corp’s proposed sale of its Guyana oil properties, hinting at a possible counteroffer to Chevron Corp’s pending acquisition of the assets.
In a conference on Wednesday, Senior Vice President Neil Chapman stated that the arbitration case is intended to safeguard Exxon’s ability to consider making a bid for Hess’s 30% stake in the significant Stabroek offshore oil block if Chevron proceeds with its proposed $53 billion acquisition of Hess.
Stabroek, hailed as one of the largest oil discoveries in decades, is the focal point of Chevron’s bid for Hess. Exxon explicitly stated for the first time its potential interest in bidding for Hess’s Guyana properties.
Chapman remarked at a Morgan Stanley event in New York, “If there is a transaction, we plan to exert our preemption rights,” referring to the rights outlined in the consortium’s operating agreement that allow Exxon to assess the value and potentially match it if they choose to do so.
While Exxon declined to confirm whether it would bid for Hess assets if Chevron’s deal falls through, Chapman highlighted that Exxon is prepared to utilize its preemption rights in the event of any transaction.
Chevron and Hess have expressed confidence in their position, asserting that the rights may not apply due to the nature of the transaction involving a merger with the parent company, preserving Hess’s Guyana subsidiary.
Chevron spokesperson Braden Reddall affirmed, “We remain fully committed to the transaction, and are confident in our position. We look forward to closing the transaction on the terms we’ve agreed.”
Exxon’s challenge to Chevron’s bid is seen as an attempt to uphold the joint operating agreement governing the partners’ roles in the Stabroek block. Analysts suggest that Exxon’s arbitration filing could serve as a strategic negotiation tactic.
The drop in Hess stock on Wednesday indicates market uncertainty regarding the outcome, with Exxon potentially gaining ownership of Hess Guyana assets if Chevron proceeds with its purchase.
Hess shares experienced a more than 2% decline, while Chevron shares fell less than 1% and Exxon shares rose by 1% following these developments.
If Exxon were to acquire Hess’s stake, it would increase its ownership in the consortium to 75%, consolidating its position as a major player in the block.
Chapman mentioned that a contract arbitration case typically takes six months or longer, emphasizing that disputes are common and can be resolved through negotiation.
Exxon is currently awaiting regulatory approval for its proposed $60 billion acquisition of Pioneer Natural Resources, a move that would solidify its position as the largest oil producer in the leading U.S. oil field.