Chevron Wins Legal Battle, Secures $53 Billion Hess Acquisition

Chevron has emerged victorious in its legal battle against Exxon Mobil, paving the way for the immediate closure of its $53 billion acquisition of Hess. This significant development, announced on July 18, grants Chevron access to one of the most substantial oil discoveries of the century, located offshore in sparsely populated Guyana.

The arbitration panel, overseen by the International Chamber of Commerce, delivered a long-awaited ruling that marks a major triumph for Chevron and its CEO, Mike Wirth. Wirth's strategic decision to acquire New York-based Hess, despite the legal risks, has proven to be a bold and successful move. The acquisition provides Chevron with access to over 11 billion barrels of discoverable oil equivalent in the Stabroek Block, which spans 6.6 million acres offshore of Guyana in South America.

Chevron's acquisition of Hess was initially announced in October 2023, with the goal of completing the deal by June 2024. However, scheduling challenges delayed the arbitration hearing until May 2025, causing uncertainty among investors. Exxon, which made the Guyana discovery a decade ago and operates the exploration and production there, had argued that it had the right of first refusal for Hess’ ownership of the Guyana stake. Chevron and Hess countered that this right of refusal did not apply to the sale of the entire company.

Despite the legal dispute, the deal will make Exxon and Chevron partners in Guyana. Exxon, which will continue to lead the Guyana partnership with its 45% ownership stake, expressed disagreement with the ruling but respect for the outcome. Chevron will join as a 30% owner, while China’s CNOOC holds the remaining 25%.

The merger significantly enhances Chevron's portfolio, adding nearly 500,000 barrels of oil equivalent daily to its production. This boosts Chevron's overall volumes from 3.35 million barrels a day to about 3.83 million barrels daily. The acquisition also includes Hess’ assets in the Gulf of Mexico and its Southeast Asia natural gas business, in addition to the Bakken Shale in North Dakota, which is the biggest source of oil and gas volumes for Hess.

Analysts have noted that many investors were awaiting the arbitration results before making decisions. With the legal battle resolved, Chevron is now poised to benefit from the deal, with a focus shifting to its free cash flow growth in 2026 and beyond. The industry can now move forward, leaving behind the legal disputes and focusing on the potential for continued growth and value creation in Guyana.