The deal puts two of the top oil giants, Chevron and Exxon Mobil, head-to-head in two of the world’s fastest-growing oil basins – shale and Guyana.
Guyana has become a major oil producer in recent years after huge discoveries by Exxon Mobil, its partner Hess and China’s CNOOC, which together produce 400,000 bpd from two offshore vessels and have said they could develop up to 10 offshore projects.
To buy Hess, Chevron is offering $171 for every Hess share, implying a premium of about 4.9% to the share’s last close.
CEO John Hess of Hess Corp is expected to join Chevron’s board of directors once the deal closes around the first half of 2024.
The combined company is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance, the companies said.
“With greater confidence in projected long-term cash generation, Chevron intends to return more cash to shareholders with higher dividend per share growth and higher share repurchases,” Chevron’s CFO Pierre Breber said in a statement.
The deal comes weeks after rival Exxon made a $60 billion offer for Pioneer Natural Resources that would make it the biggest producer in the largest U.S. oilfield.