Sunday, June 23, 2024
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Exxon Mobil’s arbitration case, which could potentially disrupt Chevron’s acquisition of Hess Corporation, is expected to extend into 2025, according to Exxon CEO Darren Woods. The dispute revolves around Exxon and CNOOC Ltd’s contention for a right-of-first-refusal over any sale of Hess’s 30% stake in the Stabroek offshore oil block in Guyana. This block holds significant oil and gas resources, making it a prized asset.

Hess has scheduled a shareholder vote on May 28, 2024, regarding Chevron’s proposed $53 billion all-stock deal. The transaction would grant Chevron a significant share in Guyana’s lucrative offshore oil fields. Despite the pending vote, Exxon seems inclined to slow down the deal’s closure to evaluate its options further.

Westchester Capital Management, a major Hess shareholder, expects to vote in favor of the Chevron deal unless a higher bid surfaces. The current spread between Hess and Chevron’s closing prices suggests a 79% chance of the deal’s successful completion, albeit lower than anticipated for a transaction of this caliber.

Exxon has indicated it has no plans to bid for Hess outright but may consider increasing its stake in the Guyana joint venture. The company’s preference appears to be delaying the shareholder vote to cast doubt on the deal’s certainty.

Woods’ comments imply a lengthier timeline for resolving the arbitration case and consequently delaying the closure of the Chevron-Hess deal. Chevron’s CEO, Michael Wirth, has stated that the company is focused on obtaining approval from the U.S. Federal Trade Commission and securing the necessary votes from Hess shareholders.

While Hess has yet to respond to requests for comment, an Exxon spokesperson reiterated that the arbitration timeline aligns with previous expectations. However, they refrained from commenting on the potential impact of the arbitration on the Hess shareholder vote.

Amidst these developments, U.S. antitrust regulators have not yet approved the Chevron-Hess deal, adding another layer of uncertainty to the transaction. Exxon’s recent acquisition of Pioneer Natural Resources also awaits regulatory clearance, further complicating the energy sector landscape.

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