Chevron completes acquisition of Hess Corporation

Chevron (CVX) announced that it has completed its acquisition of Hess Corporation (HES) following the satisfaction of all necessary closing conditions, including a favorable arbitration outcome regarding Hess’ offshore Guyana asset. In addition, on July 17, the Federal Trade Commission lifted its earlier restriction, clearing the way for John Hess to join Chevron’s board of directors, subject to board approval. Chevron now owns a 30% position in the Guyana Stabroek Block, which has more than 11B barrels of oil equivalent discovered recoverable resource; 463,000 net acres of high-quality inventory in the Bakken; with 31,000 barrels of oil equivalent per day; and natural gas assets in Southeast Asia with 57 thousand barrels of oil equivalent per day. Under the terms of the merger agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. As a result, Chevron intends to issue approximately 301M shares of common stock out of treasury to Hess stockholders in connection with the transaction. The 15.38M shares of Hess common stock beneficially owned by Chevron immediately prior to the closing were cancelled for no consideration. Chevron expects to achieve the following transaction benefits: accretive to cash flow per share and extends growth into 2030s; expected to be accretive to cash flow per share in 2025 after achieving synergies and start-up of the fourth floating production storage and offloading vessel in Guyana; increases Chevron’s estimated five-year production and free cash flow growth rates and expected to extend such growth into the next decade. The combined company’s capital expenditures budget is expected to be between $19B and $22B. After closing, Chevron will target to sustain a double-digit Return on Capital Employed at mid-cycle prices. The transaction is expected to achieve run-rate cost synergies of $1B by the end of 2025. Chevron will provide updated long-term financial and operational information and guidance to reflect the acquisition of Hess at its Investor Day in New York City on November 12.