Chevron Corp. (CVX) is on the brink of obtaining regulatory clearance for its $53 billion acquisition of Hess Corp. (HES) with the U.S. Federal Trade Commission (FTC). The FTC has required Chevron to exclude Hess CEO John Hess from its board of directors as a condition for the merger’s approval.
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Chevron has reportedly agreed to this condition, marking a major step toward completing the acquisition. While John Hess may still have an advisory role within the company, his removal from the board represents a significant development in the merger process.
This decision by the FTC reflects the increasing scrutiny of mergers in the oil and gas sector.
Merger Faces Troubles Beyond Antitrust Issues
Beyond regulatory hurdles, the Chevron-Hess merger is also facing opposition from Exxon Mobil (XOM). Exxon has raised concerns over the deal, citing a “right of first refusal” regarding Hess’ stake in the Stabroek block in Guyana, a highly valuable oil and gas asset. It is crucial to address this dispute for the merger to proceed.
To explain further, the Stabroek block, operated by Exxon Mobil with a 45% stake, is a highly promising asset for oil and gas production. Hess holds a 30% stake in the project, while CNOOC Ltd. has a 25% stake. This joint venture aims to double production to 1.3 million barrels per day by 2027, which points to its strategic importance.
Is CVX a Good Stock to Buy?
Turning to Wall Street, CVX stock has a Moderate Buy consensus rating based on eight Buys and five Holds assigned in the last three months. At $174.83, the average Chevron price target implies 23.13% upside potential. Shares of the company have declined 7.24% in the past six months.
