Dive Brief:
- Chevron has announced it will acquire fellow energy firm Hess in an all-stock deal worth about $53 billion, or $171 per share, based on Chevron’s closing price on Friday, according to a Monday press release.
- Hess’s assets in the Bakken formation will add to Chevron’s existing U.S. oil positions in the Permian and Denver-Julesburg basins. The acquisition will also include Hess assets in the Gulf of Mexico and Guyana.
- This is the second major oil company acquisition in the past few weeks, after Exxon Mobil acquired Pioneer Natural Resources for $60 million on Oct. 11. That was also an all-stock deal.
Dive Insight:
Chevron said the acquisition of Hess will help it continue to pursue greener operations, with the Guyana assets boasting low carbon intensity in addition to strong cash margins. Chevron also recently invested an undisclosed amount into EV charging firm Electric Era.
“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” said Chevron Chairman and CEO Mike Wirth in the press release.
Company officials expect the combined entity to increase its production and free cash flow more quickly than Chevron’s current five-year guidance, and could expand that growth into the next decade. It also expects capital expenditures of between $19 billion and $22 billion, with asset sales adding $10 billion to $15 billion in before-tax proceeds through 2028. Run-rate synergies are expected to be $1 billion before tax within a year of closing.
Hess CEO John Hess will join Chevron’s Board of Directors as part of the merger agreement.
“I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition,” Hess said in a statement.
The agreement has already been approved by both boards of directors and just needs approval from Hess shareholders, along with regulatory approval. It’s expected to close in the first half of 2024.
Consolidation has been a major theme in the convenience and fueling industries so far in 2023. Fellow energy giant BP bought TravelCenters of America in May for $1.3 billion, while many eyes were on the merger between Maverik and Kum & Go in August.
San Ramon, California-based Chevron produces crude oil and natural gas and manufactures transportation fuels, lubricants, petrochemicals and additives. In the U.S., Chevron also owns more than 1,000 ExtraMile Convenience Stores through a joint venture with Jacksons Food Stores.
