The American energy giant Chevron will buy its compatriot Hess, a gas and oil producer, for 53 billion dollars (nearly 50 billion euros), in a context particularly favorable to acquisitions in this sector.
This mega operation, announced this Monday, October 23 in a joint press release by the two groups, comes less than two weeks after the announcement of the purchase of Pioneer by ExxonMobil for 60 billion dollars.
Chevron plans to finance the acquisition of Hess entirely in shares. Based on Chevron’s Oct. 20 closing price, the total transaction, including debt, is valued at $60 billion, the companies said. Hess CEO John Hess is expected to join Chevron’s board. This acquisition, which should be finalized during the first half of 2024, will help diversify Chevron’s portfolio, the press release argues, while gas and oil prices boost the profits of the sector giants.
Oil is currently trading above $87 per barrel, a historically high level. With this operation, Chevron gets its hands on Hess’s positions in the “Stabroek” offshore oil block off the coast of Guyana, a small South American country which has the world’s largest reserves of crude oil per capita. It is estimated that this block – which whets the appetite of oil companies – would represent 11 billion barrels of oil equivalent, 30% of which will therefore be exploited by Chevron at the end of the transaction.
Massive stock buybacks
The group is also gaining a presence in the Bakken basin (North Dakota), rich in shale oil, but also in the deep waters of the Gulf of Mexico and the Gulf of Thailand. “Hess’ Bakken assets add another leading position in U.S. shale to Chevron’s operations,” according to the release.
“I believe our strategic combination creates a stronger company in all respects”, with the “asset portfolio and financial resources necessary to guide us through the energy transition and generate significant shareholder value for years to come”, he said. declared CEO John Hess, quoted in the press release.
After the finalization of this acquisition, Chevron intends to increase its share repurchases by $2.5 billion, to reach $20 billion per year, “in a scenario of continued rise in share prices. oil”. Last year, Chevron posted a record profit of $35.5 billion. For its part, Hess published a net profit of 2.2 billion for 2022. In electronic exchanges before the opening of the New York Stock Exchange, the title of Chevron lost 3.4% to 161.1, while that of Hess appreciated by 1.15% to 164.9 dollars.