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Chevron has acquired a 4.99% stake in Hess Corp since the beginning of 2024, signaling confidence that its previously announced $53 billion megadeal with the company remains on track. The disclosure came via a recent regulatory filing, revealing that the oil giant spent approximately $3.2 billion to secure 15.38 million common shares in Hess. The acquisition is particularly significant given the ongoing scrutiny around Chevron’s proposed merger with Hess, which has faced uncertainties related to its partnership with ExxonMobil in Guyana. By purchasing this stake, Chevron is not only reaffirming its commitment to the deal but also potentially securing influence in Hess’s shareholder decisions ahead of the formal transaction closing.
The merger, announced in late 2023, is among the biggest in the energy sector in recent years, reflecting a broader trend of consolidation among oil majors as they position themselves for long-term growth. The move follows ExxonMobil’s $60 billion acquisition of Pioneer Natural Resources and Occidental Petroleum’s $12 billion purchase of CrownRock. These deals highlight a strategic shift where oil giants seek to strengthen their portfolios in high-production regions to enhance profitability amid shifting global energy demand. Chevron’s investment in Hess comes at a time when oil prices remain volatile, and securing stable, high-quality assets—such as Hess’s operations in Guyana’s Stabroek Block—has become a top priority for major players.
Hess’s Guyana assets represent a core reason behind Chevron’s efforts to complete the transaction. The South American country has emerged as one of the most attractive oil plays globally, with massive offshore reserves that ExxonMobil and Hess have jointly developed over recent years. However, ExxonMobil’s preemptive rights to Hess’s Guyana stake remain a potential sticking point. Exxon has previously signaled that it will carefully examine any impact the Chevron-Hess merger might have on the existing partnership. In response, Chevron’s proactive stake acquisition demonstrates its determination to push the deal forward while possibly alleviating concerns from regulatory authorities and Hess investors.
Market reaction to Chevron’s latest maneuver has been notably optimistic. Investors view the company’s 5% stake acquisition as a vote of confidence in the deal’s eventual completion. Hess shares have seen moderate gains following the announcement, reflecting a positive sentiment around the expected merger. At the same time, Chevron’s decision to allocate billions toward Hess rather than share buybacks or other investments underscores its strategic focus on securing long-term production growth over short-term capital returns. As regulators continue to evaluate the merger, analysts will be watching for further developments, particularly Exxon’s next moves regarding its rights to Hess’s Guyana assets. The energy sector’s consolidation wave remains a key theme for 2024, as oil majors vie for dominance in pivotal resource-rich regions.
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