Hess, a prominent U.S. oil producer, announced on Thursday that it is reevaluating the timeline for completing its acquisition by Chevron in light of recent developments involving Exxon’s interest in potentially countering the deal for Hess’s Guyana assets.
Exxon’s move to file a contract arbitration claim concerning Hess’s proposed sale of its Guyana oil properties has introduced a new layer of complexity to the situation, suggesting the possibility of disrupting Chevron’s pending acquisition of Hess. The ongoing dispute between these major U.S. oil players has raised concerns about the future of the Hess takeover deal, as highlighted in a warning issued by Chevron in a recent securities filing. In the event that the deal falls through, Hess could face a substantial $1.7 billion breakup fee.
The arbitration case initiated by Exxon aims to safeguard its ability to explore the option of making a bid for Hess’s 30% stake in the significant Stabroek offshore oil block should Chevron proceed with its proposed $53 billion purchase of Hess.
Commenting on the situation, RBC Capital Markets analyst Biraj Borkhataria noted, “Exxon is currently finalizing the $60-billion acquisition of Pioneer Natural, and it is plausible to consider that engaging in arbitration proceedings could potentially impede the CVX-Hess transaction, allowing Exxon to position itself for a significant future deal with Hess.”
Chevron’s acquisition of Hess has already faced delays due to the U.S. Federal Trade Commission’s request for additional information regarding the merger. This request has pushed back any potential closing to at least the middle of this year, and Exxon’s recent claim may further prolong the process.
Despite the challenges posed by Exxon’s actions, Hess has expressed confidence in its stance, stating that it disagrees with Exxon’s interpretation of the agreement and believes that its position will ultimately prevail in arbitration.
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