Editor's note: This story was updated to include maps and additional information.
Chevron Corp. finalized its acquisition of Hess Corp., bringing together two major U.S. oil and gas producers.
The deal’s closing followed Hess’ win in international arbitration concerning its ownership of an offshore Guyana asset.
Under terms of the merger, first announced in October 2023, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share owned. Chevron will issue approximately 301 million shares of common stock to Hess stockholders.
“The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders,” said Chevron Chairman and CEO Mike Wirth.
The deal adds foundational new assets to Chevron’s global portfolio, including Hess’ 30% stake in the Stabroek Block offshore Guyana. The Guyana project holds an estimated 11 Bbbl of recoverable resource, Chevron said.
Exxon argued it had a right-of-first refusal to acquire Hess’ 30% stake in the project. But the International Chamber of Commerce (ICC) sided with Hess in the arbitration case, the firms announced the morning of July 18.
Chevron will also add 463,000 net acres in North Dakota’s Bakken play, where Hess is among the top oil producers, and 31,000 boe/d of production in the Gulf of America.
On July 17, the Federal Trade Commission (FTC) reopened and set aside a previous order barring Hess CEO John Hess from joining Chevron’s board.
The Biden-era FTC signed off on the mega-merger between the two oil producers, but banned Chevron from nominating, designating or appointing Hess to its board of directors.
The FTC’s original complaint against Hess alleged that he expressed support to OPEC representatives for production cuts intended to stabilize global oil markets. The FTC argued Hess’ participation on the Chevron board could lead to the supermajor coordinating output with the OPEC cartel, raising antitrust concerns.
But the all-Republican FTC voted 3-0 to vacate the previous final consent order, allowing Hess to join the Chevron board.
“Additionally, I’m pleased with the FTC’s unanimous decision,” Wirth said. “John is a respected industry leader, and our board would benefit from his experience, relationships and expertise.”
The Hess deal is expected to be accretive to Chevron’s cash flow per share in 2025 after synergistic cost reductions and the start-up of the fourth FPSO and offloading vessel in Guyana. Chevron is aiming for $1 billion in run-rate cost synergies by year-end.
Combined with Hess, Chevron’s capex is expected to range between $19 billion and $22 billion.
Chevron grew its Colorado footprint through a $6.3 billion acquisition of D-J Basin producer PDC Energy in 2023.
Chevron produced an average 132,000 bbl/d of oil, 930 MMcf/d of gas and 107,000 bbl/d of NGL from the D-J Basin in 2024.
The Hess acquisition adds a huge footprint in the Bakken, where the company holds 463,000 net acres. Net production from the Bakken averaged 195,000 boe/d in the first quarter.
Hess ran four drilling rigs and completed 36 wells in the first quarter. The company planned to continue running four Bakken rigs through the end of the year.
Bakken production is expected to range between 210,000 boe/d and 215,000 boe/d in the second quarter, Hess said.
Hess continues to push the needle in the maturing Bakken, which has been tapped by producers with horizontal wells for more than 25 years. Hess claimed it drilled the Bakken’s first 4-mile laterals.
The two 4-mile wells run parallel, north to south, in the Beaver Lodge Field northeast of Williston, North Dakota. Nabors Industries operated the drilling rig. Hess also drilled a 2-mile observation well to study recoveries and depletion from the 4-mile wells over time.
Guyana: The crown jewel
The majority of the $53 billion transaction’s value centered around Hess’ ownership in Guyana’s Stabroek Block.
Hess’ net production from Stabroek averaged 183,000 bbl/d in the first quarter. Guyana net production is expected to average 180,000 bbl/d in the second quarter.
Hess holds a 30% interest in the Stabroek Block offshore Guyana. (Source: Chevron investor relations)
The Yellowtail FPSO, the fourth and largest oil development in the project to date, is slated to begin production in the third quarter. Yellowtail’s initial gross production capacity is approximately 250,000 bbl/d.
Several developments are expected to start-up in the coming years, including Uaru in 2027, Whiptail in 2027 and Hammerhead in 2029.
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