Chevron Corporation announced Monday that it has reached an agreement to acquire competitor Hess Corporation in an all-stock deal valued at $53 billion.
The energy company says the acquisition "upgrades and diversifies Chevron’s already advantaged portfolio."
"The Stabroek block in Guyana is an extraordinary asset with industry leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade. Hess’ Bakken assets add another leading U.S. shale position to Chevron’s DJ and Permian basin operations and further strengthen domestic energy security," Chevron said in a statement. "The combined company is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance."
Chevron says the deal – which is expected to close in the first half of next year and has been unanimously approved by both companies’ boards of directors – is "to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023."
Shares of both companies were trending down slightly in pre-market trading Monday morning.
Under the agreement, Hess CEO John Hess is expected to join Chevron’s Board of Directors.
The deal will have to meet approval from Hess shareholders and regulators in order to go through.
"This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets," Chevron Chairman and CEO Mike Wirth said in a statement. "Importantly, our two companies have similar values and cultures, with a focus on operating safely and with integrity, attracting and developing the best people, making positive contributions to our communities and delivering higher returns and lower carbon."
"I am proud of our people and what we have achieved as a company, which has one of the industry’s best growth portfolios including Guyana, the world’s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer," added Hess CEO John Hess.
"Chevron has a world-class diversified portfolio of assets and one of the industry’s strongest balance sheets and cash return profiles," he also said. "I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and deliver significant shareholder value for years to come."