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What’s Really Wrong with Thames Water?

What’s Really Wrong with Thames Water?

Following the Thames Water debacle,…

Oil Stocks Drop Despite Major Chevron-Hess Deal

Amid lower crude oil prices, U.S. oil stocks and oil-tracking exchange-traded funds (ETF) opened lower on Monday, and even Hess’s shares slid after Chevron’s announcement it would buy the smaller U.S. oil firm in an all-stock deal.

Hess Corporation (NYSE: HES) was down by 0.55% in pre-market trade, despite being the target of the Chevron acquisition, due to the all-stock nature of the announced transaction.

Chevron (NYSE: CVX) was down 2.6% pre-market, after announcing earlier today an agreement to buy Hess Corporation in an all-stock transaction valued at $53 billion in another mega deal in the oil industry that will give the U.S. supermajor exposure to Guyana’s large offshore oil reserves.

The all-stock deal is valued at $171 per share based on Chevron’s closing price on October 20, 2023. The total enterprise value, including debt, of the transaction is $60 billion, Chevron said in a statement on Monday.

This is the second major deal in the U.S. oil industry announced this month. Earlier in October, ExxonMobil announced a deal to buy Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion. The implied total enterprise value of the transaction, including net debt, is around $64.5 billion.

The muted reaction from the market to the Chevron-Hess deal was probably due to the fact that this is an all-stock transaction, too, analysts say.

Crude oil prices were also down early on Monday, further weighing on the oil stocks. Continued diplomatic talks gave traders hope the conflict in the Middle East might not escalate into a full-scale regional war.

The Energy Select Sector SPDR Fund (NYSEARCA: XLE) was down 0.95% pre-market, as were the stocks of some of the fund’s major constituents, including ExxonMobil, Occidental Petroleum, and Marathon Oil Corp.

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The oil market will continue to follow closely the events in the Middle East, which could give direction to oil prices and oil stocks this week.

By Charles Kennedy for Oilprice.com

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  • George Doolittle on October 23 2023 said:
    The US oil market continues to be hit hard ... really hard in point of fact...by continued sales growth in now matured hybrid drive systems for USA Das Auto in particular as made and sold by Toyota now Honda as well. Also inflation of which oil is a major component impacts same said US economy very negatively for oil bulls as

    A: natural gas prices remain at record lows
    B: food consumes more of the personal budget in particular given the collapse in home values across much though not all of the USA and other real estate speculations that have now proved out to be ruinous.

    Higher interest rates #irony have proved price supportive for US oil and distillate product prices as now there is some return on savings if modest and for the first time in a generation. Inflation is still wildly out of control as can be seen in the prices of new vehicles upon all of the USA creating a quite spectacular glut in both used and new vehicles excepting for the motorcycle market which remains wholly dominated by continued product from $hmc Honda Motor Corporation.

    Tesla remains an epic wildcard in all of this having pushed in particular Volkswagen but a great many others now into a massive over investment upon the pure BEV market made in the USA.

    Long every coal name out there in the USA as a consequence. $meoh Methanex another interesting play as an alternative fuel for diesel. Canada continues to produce truly awesome amounts of oil product as well. "Events in the Middle East" (Israel Gaza War) all seem very well priced in at the moment granted much in the way of "wanting to expand" with a USA Iran War started by who knows who with that.

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