Photo caption: Chevron logo
Chevron’s $53 billion bid for Hess faces arbitration as ExxonMobil and CNOOC claim a contractual right to block the deal.
The outcome is pivotal for Chevron, which urgently needs Hess’s Guyana assets to reverse its declining reserves.
A tribunal ruling is expected by Q3 and could shift the geopolitical balance of oil power in the Western Hemisphere.
A high-stakes arbitration kicks off Monday in London that could make or break Chevron’s $53 billion bid to acquire Hess Corp—and with it, a coveted 30% stake in Guyana’s booming Stabroek Block. ExxonMobil and CNOOC, Hess’s partners in the block, claim they have a right of first refusal on that stake, arguing the Chevron-Hess deal triggers the clause. But Chevron and Hess counter that the right doesn’t apply to full corporate mergers. The outcome rests on contractual fine print, but the implications are massive: Guyana’s Stabroek Block holds over 11 billion barrels of oil equivalent, and output is projected to double by 2030.
For Chevron, this is a make-or-break moment. The company’s reserves replacement ratio (RRR) hit -4% last year, its lowest in a decade. It desperately needs Hess’s Guyana asset to boost its RRR and plug a growing gap in its portfolio. CEO Mike Wirth has already poured over $3 billion into Hess stock and positioned the company to close the deal quickly—if it wins. If not, Chevron walks away, leaving Exxon and CNOOC free to increase their control over one of the world’s hottest oil plays.
The arbitration, led by the International Chamber of Commerce, is expected to move faster than typical, with a ruling anticipated by Q3. Traders are betting big on a Chevron win—about $10 billion worth of Hess shares have been scooped up by merger-arb funds expecting the deal to close, according to Morgan Stanley’s head of Special Situations, Matthew Mitchell, and cited by Bloomberg.
The outcome hinges on the tribunal’s interpretation of a joint operating agreement drafted more than a decade ago.
If Chevron loses, the consequences will ripple far beyond one failed deal, with Exxon largely expected to consolidate its dominance in Guyana. Chevron, meanwhile, would be left scrambling for another big-ticket asset to shore up its future. The tribunal’s ruling could redefine the balance of power in the Western Hemisphere’s most promising oil basin.
=== Oilprice.com ===
