Chevron has indicated in a securities filing that its planned acquisition of Hess Corp for $53 billion could fall apart.
This follows ExxonMobil’s claim that it was entitled to first refusal over any sale of Hess’s interest in the Stabroek block offshore of Guyana.
The Stabroek block is operated by ExxonMobil with a 45% interest, with Hess and CNOOC of China being minority partners. After a string of discoveries in the block, the recoverable oil reserves are currently estimated at 11 billion barrels.
ExxonMobil’s desire to enlarge its interest, as well as Chevron’s intention to abandon its acquisition of Hess if it does not get Hess’s Guyana assets, demonstrates how much both companies value the Stabroek block.
Chevron and ExxonMobil, which also make the Texaco and Mobil lubricant and grease ranges respectively, will now enter negotiations, possibly with them going to arbitration. Chevron’s belief is that the talks will ultimately enable the merger to go ahead. It and Hess also said in a statement:
“The right of first refusal provision is not applicable to the merger. We are fully committed to the transaction and do not believe these discussions will prevent its successful completion.”
The consortium led by ExxonMobil is planning to increase its production in the block to 1.2 million barrels per day by 2027. It is currently the dominant player in Guyana’s fledgling oil industry, but the government there recently tried to attract other international oil companies through an auction for other offshore blocks.
