(AOF) – Oil company, Chevron has reached an agreement with Hess (American oil company) to acquire all of its outstanding shares in a transaction with a total value of $53 billion, or $171 per share. share, according to Chevron’s closing price on October 20, 2023. Following this announcement, Chevron fell 2.43% to $162.81. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron stock for each Hess share. The total value of the transaction, including debt, is $60 billion.
This acquisition is expected to be finalized during the first half of 2024. This acquisition strengthens and diversifies Chevron’s already privileged portfolio. Thus, the Stabroek block in Guyana (offshore oil reservoir) is an “extraordinary” asset for the group. It is estimated that this block would represent 11 billion barrels of oil equivalent, 30% of which will be exploited by Chevron at the end of this transaction.
Chevron will also mark its presence in the Bakken basin in North Dakota (Midwest of the United States) rich in shale oil: “Hess’ Bakken assets add another leading position in the United States shale to the activities of the Chevron’s Permian Basin, the oil company said in a statement.
The combined company is expected to increase production and free cash flow faster and for longer than Chevron’s current five-year forecast.
Additionally, Hess executive John Hess will join Chevron’s board of directors once the deal closes.
Chevron’s announcement comes less than two weeks after ExxonMobil acquired Pioneer for $60 billion. This is Exxon’s largest acquisition since its $81 billion purchase of Mobil in 1998.
The transaction allows Exxon to expand its presence in the Permian Basin, in the southern United States. Pioneer Nautral Resources is the third largest oil producer in the Permian Basin, after Chevron and ConocoPhillips.
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