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Chevron has warned that its planned $53 billion acquisition of Hess could be thwarted by rivals ExxonMobil and China National Offshore Oil Corporation, which are asserting their right to pre-empt a stake in a critical Guyana oil project. for the agreement.
Chevron, the second largest oil company in the United States, has been “engaged in discussions” with Exxon and Cnooc – joint owners of the Stabroek Block project – “regarding a right of first refusal provision in the joint operating agreement” for the development, he said. in a regulatory filing on Monday.
If the talks did not “result in an acceptable resolution,” or if any subsequent arbitration did not confirm its belief that the right of first refusal did not apply in this case, Chevron said the Hess acquisition would not go through.
The friction underscores the value placed on the Guyana project: the largest oil find globally in the last decade and the crown jewel of assets to come from Hess, the largest deal in Chevron's history.
There was little international interest in Guyana's hydrocarbon potential until a consortium led by Exxon made a significant discovery off its coast in 2015. In the years since, the group has made more than 30 such discoveries in the area.
In a statement on Monday, Exxon, the largest U.S. supermajor, said it was “engaged in discussions with Hess and Chevron and that those discussions will continue.”
“We owe it to our investors and partners to consider our pre-emptive rights established under our joint operating agreement to ensure that we preserve our right to realize the significant value we have created and are entitled to in the Guyana asset,” he added. .
Hess shares fell 4 percent in after-hours trading, while Chevron shares fell 1 percent. Exxon shares were little changed.
TD Cowen analyst Jason Gabelman said “the most likely outcome is that the . . . The agreement is finally consummated, perhaps with a little delay.”
And he added: “A low probability result is one in which a referee rules [right of first refusal] is applicable, in which case the agreement would fail and [Hess] would continue to exist as an independent company with its current interest in the Stabroek Block.”
Guyana's oil riches, estimated at 11 billion barrels of gross recoverable resources for the Stabroek Block, have put the South American nation in the spotlight, as neighboring Venezuela increases its military presence on the border while arguing it has rights to the country's oil wealth. eastern Essequibo region.
Exxon owns a 45 percent stake in the Stabroek project, of which it is also operator; Cnooc owns 25 percent. The remaining 30 percent is owned by Hess and will go to Chevron as part of the deal.
In a statement Monday, a Chevron spokesperson described talks with Exxon and Cnooc as “constructive” and said neither Chevron nor Hess believed the right of first refusal provision applied to the deal.
He added that “there is no possible scenario in which Exxon or Cnooc could acquire Hess' stake in Guyana as a result of the Chevron-Hess transaction.”
He said Chevron remained “fully committed to the transaction” and did not believe the provision or discussions “would impede its successful completion.”
Hess and Cnooc did not immediately respond to requests for comment.
