Chevron's Acquisition of Hess Expected to Receive FTC Approval

By Sabrina Valle

(Reuters) – The U.S. Federal Trade Commission is expected to greenlight U.S. oil producer Chevron (NYSE:CVX)'s purchase of Hess (NYSE:HES) as soon as this week. This development leaves Exxon Mobil (NYSE:XOM)'s challenge to the $53 billion deal as the final hurdle.

The proposed merger was first announced last October, and the FTC sent a second information request to Chevron two months later. Hess shares rose as much as 3% in after-hours trading on Monday following this news.

Uncertainty regarding the deal's closure has led to a 1% decrease in Chevron shares this year, contrasting with a 6.5% increase in the energy share fund XLE (NYSE:XLE).

Exxon and CNOOC (NYSE:CEO) Ltd, Hess's partners in a Guyana joint venture, are contesting the merger by claiming a right of first refusal on any sale of Hess's Guyana assets, the primary value in the proposed transaction.

A three-judge arbitration panel is set to consider the case in May 2025. Chevron and Hess anticipate a decision by August, while Exxon expects it by September 2025.

The proposed all-stock acquisition is one of the largest in the consolidating U.S. oil and gas industry, which has seen several multi-billion dollar deals.

Chevron announced the Hess deal following Exxon's $60 billion purchase of U.S. shale giant Pioneer Natural Resources (NYSE:PXD), which closed in May. Moreover, two other mergers, Occidental Petroleum (NYSE:OXY)'s deal for CrownRock and Diamondback (NASDAQ:FANG) Energy's bid for Endeavor Energy Resources, have been completed despite occurring after the Chevron-Hess combination.

The FTC required Exxon to withdraw its offer of a board seat to Pioneer Natural Resources CEO Scott Sheffield as a condition for its approval. The FTC alleged that he colluded with OPEC to reduce U.S. oil and gas output to possibly raise oil prices.

Sheffield has denied the allegations and requested the FTC vacate its ban on him taking an Exxon board seat.

A spokesperson for the FTC declined to comment on Monday.

Exxon Arbitration

The dispute over the contract governing the Exxon-CNOOC-Hess partnership delays any closure until the second half of 2025. The Guyana consortium controls one of the world's fastest-growing and lucrative oil provinces, with over 11.6 billion barrels of recoverable oil and gas discoveries since 2015.

Exxon operates all production in Guyana with a 45% stake in the offshore oil production consortium with Hess and China's CNOOC as minority partners. Their combined earnings from Guyana last year were $6.33 billion on $11.25 billion in revenue.

This information was first reported by CTFN, a data and news provider to financial professionals.