Rystad Energy: Chevron's acquisition of Hess accelerates new era of oil megamergers

Chevron's acquisition of Hess accelerates a new era of oil megamergers, says Matthew Wilks, Senior Upstream Analyst, Rystad Energy.

The big-money acquisition of Hess by Chevron and Hess accelerates the trend of consolidation and big-money deals.

Although it continues the story started by the recent Exxon-Pioneer deal, the motivation and impact of this acquisition are significantly different.

Chevron is betting big on the future output of Guyana and Hess’ stake in the offshore Stabroek block, which since 2015 has seen discoveries of more than 11 billion barrels of oil equivalent (boe) of recoverable resources.

Thanks to this deal, Chevron will have access to more than 3.4 billion boe of these Guyanese volumes.

Chevron, the California-based supermajor, has announced that it will acquire US independent operator Hess in a deal valued at US$60 billion, inclusive of debt.

The announcement is the second multi-billion megadeal by a major in the space of two weeks, coming on the heels of ExxonMobil’s purchase of Pioneer Natural Resources, earlier in October.

The assets that will change hands include a 30% working interest in the offshore Stabroek block in Guyana, Hess’ tight oil position in the Bakken shale, complementary assets in the US Gulf of Mexico and natural gas exposure in southeast Asia.

Chevron will acquire all outstanding shares of Hess in an all-stock transaction valued at US$53 billion, or US$171 per share, based on Chevron’s closing price on 20 October.

In return, Hess shareholders will receive 1.025 shares of Chevron for each Hess share.

The independent’s owner John Hess is expected to join Chevron’s board once the deal closes, which is expected in the first half of 2024.

The acquisition will add 400 000 boepd in net production in 2024, of which, almost 50% will come from Hess’ Bakken tight oil operations, 33% from offshore deepwater assets in Guyana and the Gulf of Mexico and the remaining 18% from the offshore shelf in southeast Asia.

These additions, combined with a full year of production from the corporate buyout of PDC Energy, which closed in August, will increase Chevron’s total output base next year by approximately 25% year on year to 3.9 million boepd.

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/24102023/rystad-energy-chevrons-acquisition-of-hess-accelerates-new-era-of-oil-megamergers/