Chevron’s
plan to buy
Hess
for $53 billion in stock may be in jeopardy.
The problem concerns Hess’s stake in the enormous oil fields off Guyana, one of the major attractions for Chevron. Hess’s partners,
Exxo
n and China’s
Cnooc,
are arguing that they have pre-emptive rights to buy out Hess if it wanted to sell up.
In a filing late Monday, Chevron said it’s in talks with Exxon and expects the issues to be resolved, but that there’s a chance the deal could be delayed or fall through completely.
That would be a setback to Chevron, which has recently underperformed rivals and was hoping to get a boost from Hess’s 30% stake in the offshore project in South America. Hess would be Chevron’s biggest acquisition in years.
Chevron said that it and Hess are in “constructive discussions” with Exxon and Cnooc, and that it does not believe the right of first refusal applies in the situation.
Exxon said the conversations with Hess and Chevron will continue. “We owe it to our investors and partners to consider our pre-emption rights” in order to “preserve our right to realize the significant value we’ve created and are entitled to in the Guyana asset,” a spokesperson said when contacted by email.
Chevron shares slipped 0.5% to $153.67 as the market opened Tuesday. Exxon was up 0.4%. Hess stock retreated 3.3%, while the wider S&P 500 index added 0.1%.
Write to Brian Swint at brian.swint@barrons.com
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