The US Federal Trade Commission (FTC) is on the verge of approving Chevron's proposed $53bn acquisition of oil rival Hess, potentially as early as this week, reported Reuters, citing sources familiar with the matter.
Announced last October, the proposed all-stock merger has been under scrutiny, with the FTC issuing a second request for information to Chevron two months after the announcement.
The FTC’s complaint highlighted John B Hess’s interactions with OPEC, and his encouragement for actions to stabilise production and manage oil inventories. Hess is the CEO of Hess Corporation.
In documents submitted to court as part of the process, Hess strongly argued that competitive concern raised by the FTC about Mr. Hess’s communications “is without merit.”
Hess’s board of directors “fully supports Mr. Hess in his role as CEO of Hess Corporation [and] Mr. Hess’s public and private communications with OPEC officials were consistent with his communications with US government officials, the International Energy Agency, and global business leaders on what will be needed to ensure an affordable and orderly energy transition.”
Chevron chairman and CEO Mike Wirth added: “I have the utmost respect for John, the company he has built, and the contributions he has made to our industry.”
He continued that is it is “unfortunate that our board will not get the benefit of his decades of global experience, but we look forward to drawing upon his knowledge, relationships and experience in Guyana through his service as an advisor to Chevron.”
Approval would bring Chevron one step closer to completing one of the largest mergers in the consolidating US oil and gas industry.
The deal's success now hinges on overcoming a challenge from ExxonMobil, which, alongside China National Offshore Oil Corporation (CNOOC), is contesting the merger based on a right of first refusal to Hess' valuable Guyana assets.
The Guyana JV, which comprises Exxon, CNOOC and Hess, oversees a rapidly expanding oil region with more than 11.6 billion barrels of recoverable oil and gas discoveries since 2015.
Exxon, with a 45% stake, leads the consortium's operations, which yielded combined earnings of $6.33bn on $11.25bn in revenue last year.
The contractual dispute between the Exxon-CNOOC-Hess partnership has delayed the potential closing of the Chevron-Hess deal until at least the second half of 2025.
A three-judge arbitration panel is set to review the case in May 2025, with Chevron and Hess expecting a decision by August and Exxon by September of the same year.
An FTC spokesperson has declined to comment on the news.
The Chevron-Hess transaction follows a trend of multibillion-dollar mergers and acquisitions in the sector, including Exxon's own $60bn acquisition of Pioneer Natural Resources, which was finalised in May.
As a condition for greenlighting Exxon's purchase of Pioneer Natural Resources, the FTC demanded the withdrawal of an offer for a board seat to Pioneer CEO Scott Sheffield, citing allegations of collusion with OPEC to potentially raise oil prices.
Sheffield has refuted these claims and requested the FTC to lift its ban on his Exxon board appointment.
Other notable deals such as Occidental Petroleum's acquisition of CrownRock and Diamondback Energy's bid for Endeavor Energy Resources have successfully closed.
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