Chevron to Buy Hess for $53B in All-Stock Deal
Chevron will buy smaller rival Hess Corporation in an all-stock transaction valued at $53 billion. The mega-deal will provide Chevron with access to Guyana’s vast offshore oil reserves.
Chevron will pay $171 per share, a 10.3% premium on a 20-day average based on last Friday’s closing price. The total enterprise value, including debt, of the transaction is $60 billion.
Hess shareholders will receive 1.0250 shares of Chevron per Hess share. Chevron will issue approximately 317 million shares of common stock.
The new, combined company “is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance,” Chevron said.
This is the second significant transaction in the oil industry announced this month. In October, ExxonMobil announced it would acquire Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion.
As part of the agreement, Hess CEO John Hess is expected to join Chevron’s Board of Directors.
The acquisition diversifies Chevron’s portfolio with assets in offshore Guyana and in the US Bakken shale play.
In recent years, Guyana has become an attractive area for exploration and development after Exxon and Hess discovered more than 11 billion barrels of oil equivalent offshore. Exxon, in partnership with Hess, is presently producing all the crude oil in Guyana.
Chevron will get 30% ownership in more than 11 billion barrels of oil-equivalent discovered recoverable resource with high cash margins per barrel, strong production growth outlook, and potential exploration upside, Chevron said.
Chevron will also have 465,000 net acres of high-quality, long-duration inventory in the Bakken, which will be supported by the integrated assets of Hess Midstream, complementary U.S. Gulf of Mexico assets, and stable free cash flow from its Southeast Asia natural gas business.
