Hess Corporation's shareholders are set to vote on Tuesday on Chevron's proposal to buy the company in a vote that's too close to call amid a growing number of shareholders urging for postponement of the vote or saying they would abstain.
Chevron has proposed a $53-billion all-stock transaction to buy Hess, which is a minority partner of Exxon in Guyana's prolific Stabroek block with a 30% stake.
Chevron's proposal to buy Hess is getting increased scrutiny from regulators and politicians, while the supermajor is locked in an arbitration procedure with Exxon regarding Exxon's right of first refusal for Hess's stake in the huge oil projects offshore Guyana.
Exxon claims it has the right of first refusal (ROFR) to acquire the stake of Hess Corp in the Stabroek block, from which Exxon and its current partners pump more than 500,000 barrels per day (bpd) of crude from several projects.
Chevron, for its part, claims the ROFR doesn't apply to mergers and to this case.
"Chevron and Hess believe that ExxonMobil's and CNOOC's asserted claims are without merit," Chevron said in an SEC filing, which cites a letter to shareholders by Hess.
"If the arbitration does not result in a confirmation that the Stabroek ROFR is inapplicable to the merger, and if Chevron, Hess, Exxon and/or CNOOC do not otherwise agree upon an acceptable resolution, then there would be a failure of a closing condition under the merger agreement, in which case the merger would not close," the filing says.
In March, the board of directors of Hess unanimously recommended that shareholders vote in favor of the merger with Chevron.
But several Hess shareholders have already said they would abstain in today's vote, which may not push it through the 50% threshold required for approval.
Several investors have also called for a delay of the vote, hoping to get a better offer, Reuters reported on Tuesday.
Shareholders owning some 40% of all Hess shares were considering abstaining from today's vote, sources with knowledge of the plans told Reuters last week. These investors believe the finalization of the deal now would not allow them to get better offers for their shares later.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More