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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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Hess Shareholders Approve $53 Billion Chevron Deal

  • Hess shareholders approved Chevron's $53 billion acquisition proposal.
  • ExxonMobil is challenging the deal in arbitration, claiming a right of first refusal for Hess's stake in a Guyana oil field.
  • The arbitration proceedings could extend into 2025, potentially derailing the merger.
Offshore Oil

Hess Corporation's shareholders approved Chevron's $53-billion all-stock acquisition proposal, marking a significant milestone in the merger process. This approval comes despite the ongoing arbitration between ExxonMobil and Chevron over Exxon's claimed right of first refusal (ROFR) for Hess's stake in the Stabroek block, a key asset in Guyana's prolific oil fields.

Chevron's proposal to acquire Hess has faced scrutiny from regulators and politicians, with Exxon asserting its right to pre-emptively match Chevron's offer due to its 30% stake in the Stabroek block. The dispute has complicated the merger, with Exxon filing for arbitration in the International Chamber of Commerce in Paris in March. Exxon anticipates that the arbitration proceedings could extend into 2025.

Hess CEO John Hess expressed optimism following the vote, stating, "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. Together we will be positioned as a premier integrated energy company, with the leadership, asset portfolio, and financial resources to deliver significant shareholder value for years to come."

Despite the shareholder approval, significant challenges remain. Institutional Shareholder Services, a proxy-advisory firm, had recommended abstaining from the vote, citing concerns over the deal's valuation and the potential delays introduced by the arbitration with Exxon. Some investors, including large shareholders like D.E. Shaw, had abstained, arguing that the merger undervalues Hess's assets and does not adequately address the arbitration's impact.

If Exxon's argument prevails in arbitration, it could derail the merger by invoking its right to acquire Hess's Guyana assets, estimated to be worth $40 billion or more. Such an outcome could trigger a breakup fee of around $1.7 billion owed by Hess to Chevron, complicating future acquisition attempts.

The vote's approval underscores shareholder confidence in the strategic value of the merger, despite the looming uncertainties. 

By Julianne Geiger

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