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Hess board unanimously backs Chevron merger

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Chevron’s acquisition of Hess Corp moved a step closer to realisation when Hess board members voted in their entirety to recommend the deal.

While the recommendation increases the chances that shareholders will accept the deal, ExxonMobil is disputing the transfer of Hess’s stake in the Guyana Stabroek Block. It claims that it and fellow partner CNOOC of China are contractually entitled to first refusal over any sale of the stake.

Hess disputes this, arguing that it is not selling the stake but rather merging with Chevron, which also makes the Texaco grease and lubricant range.

Exxon CEO Darren Woods recently denied that it might make its own play for Hess. He pointed out that the company just wanted to establish its preferential right before making any decisions about increasing its share in the block, which could reach 75% if it bought Hess’s entire stake:

“We’ve got to get past the first hurdle, which is an alignment, an agreement that a pre-emption right exists in the contract…I don’t feel locked into a 75% number. That is one of the options. And one of the considerations with that option would be the capital requirements we’re comfortable with.”

ExxonMobil operates the Stabroek Block on behalf of a consortium that also includes Hess and CNOOC. With it having made a series of discoveries currently estimated at 11 billion barrels of recoverable crude oil reserves, the block is a highly prized asset.

Indeed, Chevron has indicated that it will likely not proceed with the merger if the block is carved out of the deal.

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