Hess Corporation’s shareholders have approved the proposed $53 billion merger with Chevron, paving the way for the No. 2 U.S. oil company to gain a prized asset and a foothold in Exxon Mobil’s massive Guyana discoveries.
The shareholder approval clears one hurdle, but the deal still requires regulatory approval and must face a lengthy arbitration battle with Exxon and CNOOC, Hess’ partners in the Guyana project.
Regulatory approval could come as soon as next month, according to Frederic Boucher, a risk arbitrage analyst at Susquehanna Financial Group. However, the most crucial step is the resolution of the dispute filed by Exxon and CNOOC, who assert they have a right of first refusal to any sale of Hess’s Guyana assets.
The shareholder vote is a win for Hess CEO John Hess, who has staked the future of the company founded by his father on this deal. The result also puts to rest claims by some shareholders who wanted additional compensation for the delay in closing the sale, which could push the deal’s closing into 2025 due to the Exxon arbitration.
“We are very pleased that the majority of our stockholders recognize the compelling value of this strategic transaction and look forward to the successful completion of our merger with Chevron,” said CEO Hess.
The acquisition of Hess’s Guyana holdings would provide Chevron with a means to mitigate the geopolitical risks tied to its Tengiz project in Kazakhstan, which mainly transports oil through Russia. It would also help counterbalance the cost overruns experienced at Chevron’s Australian liquefied natural gas (LNG) projects.
Acquiring Hess’s Guyana assets would fill out Chevron’s oil and gas reserves and provide a new avenue for production growth, beyond their existing operations in the U.S. and Central Asia.
While Exxon has expressed no interest in bidding for Hess as a whole, it has not ruled out a potential bid for Hess’ assets in Guyana. The shareholder approval strengthens Chevron’s hand in any negotiations with Exxon over the Guyana project.