Oil major Chevron (CVX) says it is preparing to close its $53-billion acquisition of Hess Corp. (HES) within 48 hours of a decision being rendered in a legal challenge to the takeover filed by ExxonMobil (XOM).
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To that end, Chevron says that it has already prepared a severance program for Hess workers. Completing the Hess purchase is key to Chevron CEO Mike Wirth’s long-term strategy. If successful, Chevron will gain Hess’ 30% interest in the Stabroek oilfield in Guyana, which is currently operated by ExxonMobil and holds more than 11 billion barrels of oil equivalent.
The Stabroek oilfield is seen as critical to helping replenish Chevron’s declining oil and natural gas reserves. The potential acquisition also comes with Chevron in the midst of a restructuring that includes laying off up to 20% of its workforce. Hess had about 1,800 employees at the end of 2024. Hess employees have been told they can request a severance package from Chevron.
48 Hours
While it can typically take several months for companies to close an acquisition, Chevron says it aims to legally close the takeover of Hess within 48 hours of resolving an arbitration case with ExxonMobil, and will completely absorb the company within 45 days of a decision in the matter being made.
Chevron initially expected to close the Hess acquisition in the first half of 2024. That was delayed due to legal claims from ExxonMobil, which argues that they have a contractual right of first refusal to purchase Hess’ stake in the Stabroek oilfield. Chevron argues that the clause does not apply to the sale of the whole company, i.e. Hess.
A three-member arbitration panel that reviewed the dispute over the Stabroek oilfield has reached a decision. What’s left is for the Paris-based International Chamber of Commerce, which is overseeing the arbitration case, to review the decision and release the findings to both Chevron and ExxonMobil.
Is CVX Stock a Buy?
The stock of Chevron has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on nine Buy, six Hold, and two Sell recommendations assigned in the last three months. The average CVX price target of $158.18 implies 8.53% upside from current levels.
