Chevron's $53 Billion Hess Deal Faces Legal Hurdle

Published 9 hours agoCVX

Chevron's $53 Billion Hess Deal Faces Legal Hurdle

Chevron's ambitious $53 billion takeover of Hess Corp. is encountering a significant obstacle as arbitration looms over ownership rights in the Stabroek oilfield. This legal process, instigated by Exxon Mobil and Chinese firm CNOOC, is set to be heard by the International Chamber of Commerce in May 2025 in London. Reuters reported that these companies are contesting Hess’s 30% share in the oilfield, claiming a right of first refusal based on a joint operating agreement.

Exxon Mobil, which holds a 45% stake, along with CNOOC, which holds 25%, argues that they should have had the opportunity to purchase Hess's share before Chevron's acquisition. However, Chevron and Hess counter that the right-of-first-refusal clause doesn't apply to mergers. The final decision from this arbitration is crucial, as it directly impacts Chevron's acquisition plans.

Despite the ongoing dispute, Chevron appears confident, acquiring a 4.99% stake in Hess through open market purchases. Meanwhile, Hess displayed financial resilience, surpassing analyst expectations by posting a first-quarter adjusted profit of $1.81 per share, even though it reflected a 43% decline from the previous year. The resolution of this legal issue will play a vital role in determining how the acquisition unfolds and could significantly affect the oil sector's landscape.

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