Chevron is acquiring Hess Corp. for $53 billion, the second significant oil producer acquisition this month as crude prices climb.
Key Details
- Chevron is purchasing Hess in an all-cash deal worth $53 billion, including debt and preferred stock redemption.
- This comes just weeks after ExxonMobil announced its $59.5 billion purchase of Pioneer Natural Resources.
- With oil over $80 per barrel, major producers are using their windfall profits to acquire smaller players and boost payouts to shareholders.
- Chevron expects the deal to close in H1 2023 pending regulatory approvals and Hess shareholder vote.
- Hess CEO John Hess will join Chevron’s board once the acquisition is complete.
Why It’s Important
The Hess acquisition is Chevron’s largest deal since its $36 billion purchase of Texaco in 2001. It expands Chevron’s holdings in the Bakken Shale of North Dakota and the deepwater Gulf of Mexico.
The purchase gives Chevron access to Hess’ 1.9 million acres across the Bakken Formation, one of the premier U.S. shale basins. This adds to Chevron’s existing assets in the Permian Basin. Chevron is now positioned as a top producer in every major U.S. shale play.
The deal also boosts Chevron’s deepwater Gulf of Mexico assets, adding Hess’ interest in two key fields. This furthers Chevron’s strategy of growing its Gulf production.
For shareholders, the deal enables Chevron to accelerate buybacks. Chevron now plans $15-20 billion in annual buybacks to return cash to investors, up from $5-10 billion previously.
Analysts say the deal makes strategic sense for Chevron, allowing it to expand domestic oil exposure just as crude prices hit multi-year highs. As policy aims to curb imports and boost domestic production, this deal grows Chevron’s U.S. output.
