Guyana anticipates the introduction of a new company to the ExxonMobil-led consortium in charge of operations in the prolific Stabroek Block Offshore. Chevron, a U.S. multinational energy corporation, has made a substantial move by agreeing to acquire all outstanding shares of Hess Corporation for a whopping US$53 billion.
Hess Corporation, holding a 30 percent stake in Guyana’s Stabroek Block, will now see Chevron stepping into that role as it acquires this significant share.
Chevron’s strategic decision to purchase Hess comes shortly after ExxonMobil’s US$60 billion acquisition of Pioneer Natural Resources. In an all-stock transaction, Chevron will pay US$171 per share for Hess, a premium of over 10% based on a 20-day average share price.
Under the terms of the deal, Hess shareholders will receive 1.025 shares of CVX for each Hess share. The total enterprise value, including debt, of this transaction is US$60 billion, and it is expected to close in the first half of 2024, according to Chevron.
Furthermore, Chief Executive John Hess is slated to join Chevron’s Board of Directors, marking a significant development. He expressed his enthusiasm for this strategic union, emphasizing the creation of a premier integrated energy company. Hess stated, “I am proud of our people and what we have achieved as a company, which has one of the industry’s best growth portfolios, including Guyana, the world’s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer.”
Mike Wirth, Chevron’s Chief Executive Officer noted that the oil industry is entering a phase of consolidation, and the acquisition of Hess provides a “unique and compelling opportunity” to strengthen Chevron’s offshore presence through Guyana’s assets.
Notably, ExxonMobil’s significant oil discovery in the Stabroek Block began with the Liza-1 well in May 2015, which uncovered more than 295 feet of high-quality oil-bearing sandstone reservoirs. Just prior to this historic turn of events, Exxon through its local affiliate Esso Exploration and Production Guyana Limited (EEPGL) had taken Hess Corporation and CNOOC Petroleum Guyana Limited as its new partners.
This discovery led to the Liza Phase 1 development in December 2019, with a peak production capacity of 120,000 barrels of oil per day (bpd). Subsequently, the Liza Phase 2 project commenced production in February 2022, with a peak capacity of 220,000 bpd. The Payara development, expected to begin production to the end of 2023 with a peak capacity of 220,000 barrels of oil per day, marks the next phase in this remarkable journey. Additionally, the company is actively looking to kickstart three other projects: the Yellowtail Project, the Uaru Project, and the Whiptail Project.
With Chevron’s expected 30 percent ownership in the Stabroek Block, it is poised to reap the benefits of more than 11 billion barrels of oil equivalent in discovered recoverable resources, offering high cash margins per barrel, a robust production growth outlook, and promising exploration potential.
