Oil, this is how the billion-dollar moves of Chevron and Exxon are splashing out
Two weeks after the Exxon-Pioneer deal, the American oil company Chevron announces a 53 billion deal to acquire Hess. Here's what will change for the oil sector
The US oil company Chevron, one of the main international Big Oil , has reached an agreement to buy Hess Corporation, another American company in the sector, for 53 billion dollars. The deal will allow Chevron to both expand its presence in the United States and gain a stake in rival ExxonMobil's Guyana operations.
Exxon, another of the heavyweights in the oil & gas industry, has also recently announced a 58 billion maxi-acquisition of Pioneer Natural Resources .
WHAT CHANGES FOR CHEVRON
Chevron CEO Michael Wirth said the Hess deal will be good for energy security because it "brings two great American companies together." Under his leadership, the company has already acquired the companies PDC Energy and Noble Energy, both specialized in the extraction of shale hydrocarbons.
Adding together the production levels of PDC, Noble and Hess, Chevron's total output would come to 3.7 million days per day. Considering only the shale resources, extracted in the United States and rapidly scalable, Chevron will reach 1.3 million barrels per day, roughly equaling Exxon's production levels after the acquisition of Pioneer.
EYE FOCUSED ON GUYANA
The combination with Hess will give Chevron assets located in low-risk regions, such as the Gulf of Mexico and the Bakken formation in North Dakota. The deal will also give Chevron a 30 percent stake in the Stabroek oil block in Guyana, South America. The block in question is managed by Exxon and participated by the Chinese CNOOC; production is expected to triple by 2027, exceeding 1.2 million barrels per day.
The stake in Stabroek is considered by analysts to be somewhat of a jewel in Hess' crown, which will pass to Chevron. This is because from 2015 to today, more than 11 billion barrels of oil and natural gas have been discovered in Guyana : the oil boom is stimulating economic growth in a country that, before crude oil, was one of the poorest in South America.
THE FINANCIAL DETAILS OF THE CHEVRON-HESS OPERATION
To buy Hess, Chevron offered about $171 a share, a premium of 4.9 percent. The total value of the deal, including debt, is $60 billion. The operation will need to be approved by the regulatory authorities, but no antitrust issues should arise: closure is therefore expected towards the first half of 2024; after which Hess CEO John Hess will join Chevron's board of directors.
PLANS FOR THE FUTURE
Chevron has already made it known that it intends to proceed with the sale of assets worth 15-20 billion dollars and with the realization of investments of 19-21 billion per year in mega-projects. The company also plans to increase the annual dividend to shareholders by 8 percent and to insist more on share repurchases if oil prices remain high.
Unlike European oil companies, which are also focusing on renewable energy, US ones – such as Exxon and Chevron, in fact – remain focused on hydrocarbons. From an economic point of view, this strategy is paying off, but it is criticized by climate activists.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/petrolio-ecco-come-schizzano-le-mosse-miliardarie-di-chevron-ed-exxon/ on Tue, 24 Oct 2023 13:19:33 +0000.