Exxon and Chevron Lock Horns Over Guyana Stake

Exxon and Chevron are discussing a potential acquisition by Exxon of Hess Corp's stake in the Exxon-led oil operations off the coast of Guyana.

Exxon claims it has the right of first refusal on the stake that Chevron was planning to absorb after its purchase of Hess for $53 billion.

Hess had a 30% stake in the Stabroek Block where the operations are focused and it was that stake that largely motivated Chevron in its decision to buy Hess, Reuters wrote in a report on the news.

Chevron has warned that if Exxon, which has a 45% stake in the Guyanese operations, buys the Guyana stake it would essentially make the acquisition of Hess pointless.

Exxon issued a statement following the news, saying that it would "preserve our right to realize the significant value we've created and are entitled to in the Guyana asset," per Reuters.

Chevron, for its part, said that it hoped the talks "will result in an outcome that will not delay, impede or prevent the consummation of the merger."

"The right of first refusal provision is not applicable to the merger. We are fully committed to the transaction and do not believe the ROFR or these discussions will prevent its successful completion," Chevron and Hess said in a joint statement cited by Reuters.

The dispute highlights how valuable the Stabroek Block is to oil majors in an environment of dwindling new discoveries. Since the Exxon-led consortium first struck oil in the 6.6 million acre Stabroek Block, the three companies, including China's CNOOC, have booked more than 30 world-class oil discoveries containing more than an estimated 11 billion barrels of oil resources.

Production from the Stabroek Block is on track to reach some 620,000 bpd after Exxon started the latest well in the area, last November. This is seen rising to 1.2 million bpd by 2027.

By Irina Slav for Oilprice.com

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