{"id":4560,"date":"2023-10-23T10:33:47","date_gmt":"2023-10-23T10:33:47","guid":{"rendered":"https:\/\/infundpros.com\/business\/chevron-to-buy-us-oil-producer-hess-for-53bn\/"},"modified":"2023-10-23T10:33:47","modified_gmt":"2023-10-23T10:33:47","slug":"chevron-to-buy-us-oil-producer-hess-for-53bn","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=4560","title":{"rendered":"Chevron to buy US oil producer Hess for $53bn"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=f25f315f-2551-4517-a7a2-2d9418001756\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Chevron has agreed to buy US oil and gas producer Hess Corporation in a $53bn all-stock deal, in the latest step in the consolidation of the US energy sector.<\/p>\n<p>The deal values Hess\u2019s equity at $53bn, with the total enterprise value of the transaction, including the company\u2019s debt, amounting to $60bn. It comes after ExxonMobil acquired Pioneer Natural Resources earlier this month for an enterprise value of $64bn.<\/p>\n<p>The transaction comes as US energy companies look to deploy the bumper profits created by the energy crisis to consolidate a sector that faces long-term challenges as developed countries attempt to sharply reduce their reliance on fossil fuels.<\/p>\n<p>But US energy majors such as Chevron and ExxonMobil have largely pinned their future on the long-term resilience of oil and gas demand, and are keen to build scale in the US shale patch alongside the fast-growing frontier play of Guyana. <\/p>\n<p>Their stance is in contrast to some European energy majors such as BP and TotalEnergies, which are increasing investments in renewable energy at a faster pace than their US peers.<\/p>\n<p>In an interview prior to announcing the acquisition, Chevron chief executive Mike Wirth defended the company\u2019s plans to continue growing its output of oil and gas, arguing that Chevron was \u201cnot selling a product that is evil. We\u2019re selling a product that\u2019s good.\u201d <\/p>\n<p>He also criticised forecasts from the International Energy Agency, the developed world\u2019s energy watchdog, that show fossil fuel demand peaking before the end of this decade.<\/p>\n<p>\u201cI don\u2019t think they\u2019re remotely right,\u201d Wirth told the Financial Times. \u201cYou can build scenarios, but we live in the real world, and have to allocate capital to meet real-world demands.\u201d<\/p>\n<p>Wirth said in a statement that the deal \u201cpositions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets\u201d.<\/p>\n<p>Hess\u2019s assets include a 30 per cent stake in an 6.6mn-acre, 11bn barrel, offshore oil exploration scheme in Guyana and a 465,000 acre shale project in Bakken, North Dakota.<\/p>\n<p>Hess chief executive John Hess, who is expected to join Chevron\u2019s board, said the merger would create a \u201cpremier integrated energy company\u201d.<\/p>\n<p>Hess had \u201cone of the industry\u2019s best growth portfolios including Guyana, the world\u2019s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer,\u201d he said.<\/p>\n<p>As part of the deal Chevron said it would issue approximately 317mn shares of common stock. It said it expected to increase proceeds of asset sale to $10bn-$15bn through 2028, before tax. The combined company\u2019s capital expenditure budget would be between $19bn and $22bn.<\/p>\n<p>The companies said they expected cost savings of about $1bn within a year of closing.<\/p>\n<p>Prior to the announcement, Wirth had told the FT that big deals were \u201cmore difficult today\u201d, noting that companies were better run than they were when Chevron bought Texaco for $36bn in 2000.<\/p>\n<p>\u201cCould it happen? I think it probably could,\u201d he said, but he added regulatory challenges had grown and combining big companies could be complicated.<\/p>\n<p>Chevron was advised by Morgan Stanley and Evercore on the deal, while Hess was advised by Goldman Sachs and JPMorgan.<\/p>\n<p>Lawyers on the deal were Paul, Weiss, Rifkind, Wharton &amp; Garrison for Chevron and Wachtell, Lipton, Rosen &amp; Katz for Hess.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/f25f315f-2551-4517-a7a2-2d9418001756\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Chevron has&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-4560","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Chevron to buy US oil producer Hess for $53bn | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Chevron has agreed to buy US\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=4560\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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