Chevron's High Confidence Is Driving It to Wager Over $2 Billion That It Will Close This Needle-Moving Acquisition
In late 2023, Chevron (NYSE: CVX) made a bold move by agreeing to acquire Hess (NYSE: HES) for $53 billion. The transaction will enhance and extend the company's production and free cash flow growth outlook into the next decade. However, that deal hasn't closed yet because of a dispute with rival ExxonMobil (NYSE: XOM) over its lucrative partnership with Hess in offshore Guyana. The oil giants are battling in court over the deal. Chevron is so confident it will win that it recently bought about 5% of Hess' stock on the open market, valued at over $2 billion at Hess' current $46.5 billion market cap. That investment will save it some money if it does close the deal. The oil industry has been in the midst of a massive consolidation wave in recent years. Exxon triggered the buying binge when it agreed to acquire Pioneer Natural Resources for $59.5 billion in October 2023. Chevron followed a few weeks later with its $53 billion agreement to buy Hess. While Exxon has already closed its needle-moving purchase to bulk up on its position in the Permian Basin, Chevron hasn't completed its deal for Hess because of Exxon. Continue reading
In late 2023, Chevron (NYSE: CVX) made a bold move by agreeing to acquire Hess (NYSE: HES) for $53 billion. The transaction will enhance and extend the company's production and free cash flow growth outlook into the next decade. However, that deal hasn't closed yet because of a dispute with rival ExxonMobil (NYSE: XOM) over its lucrative partnership with Hess in offshore Guyana.
The oil giants are battling in court over the deal. Chevron is so confident it will win that it recently bought about 5% of Hess' stock on the open market, valued at over $2 billion at Hess' current $46.5 billion market cap. That investment will save it some money if it does close the deal.
The oil industry has been in the midst of a massive consolidation wave in recent years. Exxon triggered the buying binge when it agreed to acquire Pioneer Natural Resources for $59.5 billion in October 2023. Chevron followed a few weeks later with its $53 billion agreement to buy Hess. While Exxon has already closed its needle-moving purchase to bulk up on its position in the Permian Basin, Chevron hasn't completed its deal for Hess because of Exxon.
