NorthAmOil: US Federal Trade Commission to approve Chevron's acquisition of Hess

The US Federal Trade Commission (FTC) is expected to approve Chevron's $53bn acquisition of Hess as early as this week, according to sources familiar with the matter that were cited by Reuters. This approval will leave a challenge from ExxonMobil as the final obstacle to the deal's completion.

ExxonMobil and CNOOC International, partners in Guyana’s offshore Stabroek Block with Hess, are contesting the deal, citing a right of first refusal on the sale of Hess' Guyana assets, the key prize of the proposed merger. A three-judge arbitration panel will review the case in May 2025, with Chevron and Hess anticipating a decision by August, while ExxonMobil expects it by September 2025.

This all-stock acquisition is one of the largest in the consolidating US oil and gas industry, following several multi-billion dollar deals. Chevron's announcement came on the heels of ExxonMobil's $60bn purchase of Pioneer Natural Resources, which closed in May.

Other recent mergers include Occidental Petroleum's acquisition of CrownRock and Diamondback Energy's bid for Endeavor Energy Resources, both of which have closed despite occurring after the Chevron-Hess deal announcement.

The FTC's approval process has included significant conditions, such as requiring ExxonMobil to withdraw its offer of a board seat to Pioneer's CEO, Scott Sheffield, who has been accused of colluding with OPEC to reduce US oil and gas output. Sheffield has denied these allegations and has requested the FTC to lift the ban on his joining ExxonMobil's board.

The dispute over the ExxonMobil, CNOOC and Hess partnership's contractual terms is expected to delay the closing of the Chevron-Hess merger to the second half of 2025. The consortium controls one of the world's fastest-growing and lucrative oil regions in Guyana, with over 11.6 bn barrels of recoverable oil and gas discovered since 2015.

ExxonMobil operates all production in Guyana with a 45% stake, while Hess and CNOOC hold minority positions. Last year, the consortium generated $6.33bn in earnings on $11.25bn in revenue.

The resolution of these challenges will be critical for Chevron as it seeks to expand its footprint, particularly since the deal hinges on Chevron’s ability to acquire Hess’ stake in the Stabroek Block.

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