Chevron will acquire Hess Corporation in a deal valued at $53 billion. John Hess, Hess CEO, will be joining the Chevron board of directors following the acquisition.
“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” said Chevron Chairman and CEO Mike Wirth. “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.”
According to the company, the acquisition “upgrades and diversifies” Chevron’s portfolio. Hess’ shares in Guyana are expected to deliver production growth into the next decade, while Hess’ Bakken assets in North Dakota add to Chevron’s DJ and Permian basin operations.
Guyana is one of the fastest growing oil developments in the world, reported the Wall Street Journal. Exxon and its partners, Hess and China’s Cnooc, increased Guyana’s oil production from nothing in 2019 to 400,000 barrels per day. With the acquisition, Chevron owns nearly one-third of the estimated 11 billion barrels of oil and gas found off Guyana.
The combined company is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance, said the press release.
“This strategic combination brings together two strong companies to create a premier integrated energy company,” CEO John Hess said. “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. 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.”
The merger comes shortly after Exxon Mobil announced that it reached an agreement to acquire Pioneer Natural Resources in a deal worth approximately $64.5 billion. The merger combines 850,000 net acres in the Midland Basin with Exxon Mobil’s 570,000 net acres in the Delaware and Midland Basins. Together, the companies will have an estimated 16 billion barrels of oil equivalent resource in the Permian.