Hess Board Recommends Merger With Chevron

The board of directors of Hess Corp. unanimously recommended that shareholders vote in favor of the merger with Chevron.

That’s according to a regulatory filing the company made this week as Exxon’s challenge of the $53-billion deal continues.

Chevron and Hess struck the merger deal late last year but soon after Exxon said its partnership terms with Hess Corp. give it—and their third partner, Chinese CNOOC—the right of first refusal to the acquisition of Hess Corp.'s stake in the Stabroek Block.

This is the patch of offshore acreage where the consortium has made a string of more than a dozen discoveries, tapping an estimated 11 billion barrels and counting. It is also a central reason for Chevron to acquire Hess Corp., with the company admitting that without this stake the merger basically wouldn’t be worth the effort.

The move sparked speculation that Exxon might try to take over Hess Corp. itself. Exxon has denied that. In response to the Hess Corp. filing this week it issued a statement that supported the merger.

“We look forward to continuing our successful operations in the Stabroek block with Chevron, pending the deal closing,” the statement said, according to Hess.

Even so, Exxon is moving forward with its arbitration case regarding the merger, seeking to assert its rights in the Stabroek Block, per CEO Darren Woods.

"We're basically standing up for what we believe is a fundamental right," Woods told Reuters on the sidelines of CERAWeek. The company, he said was seeking to "secure and confirm the rights in that contract gives the existing partners."

Despite its stated support for the merger, Exxon might still derail it: the Reuters report citing Woods also said that Exxon has not ruled out buying out Hess from the Guyana project. Hess has a 30% interest in the Stabroek Block.

By Charles Kennedy for Oilprice.com

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