Hess Wins Arbitration Case with Exxon, Paves Way for Chevron Acquisition Deal

Hess Corp. has won its arbitration case with Exxon Mobil Corp., clearing the way for the $53 billion deal with Chevron Corp. to proceed. The decision is a major victory for Chevron, ending a period of strategic limbo that hurt its stock and prompting questions over the quality of its due diligence. Hess shares surged as much as 8.8% while Chevron rose 3.9%. The deal's expected completion is a win for arbitrage traders who were betting on the spread between Hess's share price and the exchange ratio agreed with Chevron.

Hess Corp. has emerged victorious in its arbitration battle with Exxon Mobil Corp., paving the way for the $53 billion acquisition by Chevron Corp. The decision, handed down by an International Chamber of Commerce (ICC) panel, clears a significant hurdle for Chevron, which had been in strategic limbo since announcing the deal over 20 months ago.

The victory is a major win for Chevron, ending a period of uncertainty that negatively impacted its stock price and raised questions about the quality of its due diligence. Chevron shares rose by as much as 3.9% following the announcement, while Hess shares surged by up to 8.8% [1].

The arbitration case centered on Exxon's claim of a right of first refusal over Hess's 30% stake in the Guyana offshore Stabroek Block. Exxon argued that the disposition of Hess's stake should be subject to its right of first refusal, a position Hess and Chevron disputed, claiming the deal was structured as a corporate merger rather than an asset sale [1].

The uncertainty surrounding the deal has been a "material contributor" to Chevron's stock underperformance compared to its rivals, according to Mike Wirth, Chevron's CEO. Wirth had stated he would walk away from the deal if Hess and Chevron lost the case [1].

The FTC's decision to reopen and set aside consent orders involving Chevron and Hess adds further momentum to the deal. The FTC had initially prohibited Chevron from nominating Hess to its board due to concerns about Hess's communication with OPEC representatives. However, the FTC later concluded that maintaining these restrictions would harm its credibility and undermine its mission [2][3].

The expected completion of the deal is a win for arbitrage traders who were betting on the spread between Hess's share price and the exchange ratio agreed upon with Chevron. Hedge funds including Millennium Management, Pentwater Capital Management, and HBK Investments LP had staked billions of dollars on the deal closing [1].

The completion of this deal is a significant milestone for Chevron, which has been expanding its pipeline of future opportunities, adding more than 11 million net exploration acres since the start of last year [4].

References:
[1] Hess Corp. wins arbitration case with Exxon, clearing way for Chevron deal. (2025-07-18). Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2025-07-18/hess-wins-exxon-arbitration-case-paving-way-for-chevron-deal
[2] FTC reopens consent orders for Exxon Mobil, Chevron acquisitions. (2025-04-18). The Wall Street Journal. Retrieved from https://www.wsj.com/business/energy-oil/ftc-reopens-consent-orders-for-proposed-acquisitions-from-exxon-mobil-chevron-4e135921
[3] FTC revisits Chevron's acquisition of Hess, nullifying consent order. (2025-09-01). GuruFocus. Retrieved from https://www.gurufocus.com/news/2986367/ftc-reopens-case-on-chevrons-cvx-acquisition-of-hess-cvx-stock-news
[4] FTC nixes orders banning Hess, Sheffield from Chevron, Exxon boards. (2025-04-18). Hart Energy. Retrieved from https://www.hartenergy.com/exclusives/ftc-nixes-orders-banning-hess-sheffield-chevron-exxon-boards-213577