U.S. oil and gas major Chevron Corporation has entered into a definitive agreement with Hess Corporation to acquire all of the outstanding shares of the compatriot company in an all-stock transaction valued at $53 billion.
Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The total enterprise value of the transaction, including debt, is $60 billion.
According to Chevron, the acquisition of Hess upgrades and diversifies the company’s portfolio as 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.
The company also notes that Hess’ Bakken assets add another leading U.S. shale position to Chevron’s DJ and Permian basin operations and further strengthen domestic energy security.
“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.”
The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to close in the first half of 2024. The acquisition is subject to Hess shareholder approval and regulatory approvals and other customary closing conditions.
The combined company is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance. In addition, John Hess is expected to join Chevron’s Board of Directors.
“This strategic combination brings together two strong companies to create a premier integrated energy company,” said John Hess .
“Chevron has a world-class diversified portfolio of assets and one of the industry’s strongest balance sheets and cash return profiles. 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.”
In terms of other company-related news, it is worth noting that this summer Chevron entered into a deal with Italian energy giant Eni for the sale of its Indonesian assets.
The move is said to be in line with Eni’s energy transition strategy, which features gas and LNG as key pillars.