Chevron-Hess Deal Hinges on Exxon Arbitration Over Guyana Oil Stake

The outcome of a key arbitration case between Exxon Mobil (NYSE:XOM) and Hess Corp (NYSE:HES) could determine the fate of Chevron’s (NYSE:CVX) $53 billion acquisition of Hess, according to sources familiar with the matter.

The dispute centers on Hess’s 30% stake in the Stabroek block, a major oilfield in Guyana operated by Exxon, which owns a 45% stake. The Paris-based International Chamber of Commerce (ICC), which is overseeing the arbitration, has reached a decision that is now under review before being released to the involved parties.

Exxon and China’s CNOOC (NYSE:CEO), also a stakeholder in the block, claim they have a right of first refusal under the joint venture agreement, potentially blocking Chevron’s takeover of Hess. Chevron and Hess argue the clause doesn’t apply since the deal involves a full-company acquisition, not just asset transfer.

“We remain confident in our position and appreciate the arbitration panel’s consideration,” an Exxon spokesperson stated. Hess, Chevron, and the ICC declined to comment. CNOOC has also yet to respond.

Chevron’s proposed acquisition, announced in October 2023, is a strategic move by CEO Mike Wirth to boost the company’s oil and gas reserves amid growing competition and declining output. The Stabroek block, one of the world’s most prolific offshore oil finds, is central to this strategy.

If the arbitration ruling favors Exxon and CNOOC, and no resolution is reached, the acquisition could collapse under the deal’s terms. The decision’s timing and details remain unknown, but the stakes are high as Chevron awaits clarity on one of its most critical strategic bets.