NorthAmOil: Chevron to buy Hess for $53bn as majors bet on fossil fuels

Chevron has agreed to buy Hess, a US exploration and production independent, for $53bn in an all-stock transaction.

Hess is active in the Bakken shale play, which will give Chevron a stake in the North Dakota formation, and in Guyana – in the offshore Stabroek block – as well as in the deepwater Gulf of Mexico and the Gulf of Thailand. Chevron is the US’s second largest integrated oil and gas player.  

"This is great for energy security: It brings together two great American companies," said Chevron CEO Michael Wirth, who had previously overseen the purchases of PDC Energy and Noble Energy, both active in shale in the domestic market.

"This deal is all about the world-class Guyana asset, which is by far the crown jewel in the Hess portfolio," said a note by analysts for Capital One Securities. Stabroek, operated by Chevron-rival ExxonMobil, is expected to triple production to more than 1.2mn barrels per day (bpd) by 2027.

The Stabroek block in Guyana is an “extraordinary asset” with industry leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade, said Chevron in a press release. It is the world’s largest oil discovery in the last 10 years, noted Chevron.