US energy giant Chevron has announced a deal to buy Hess for $53 billion (€50 billion) as major oil producers make record profits amid surging prices.
The Chevron-Hess deal comes less than two weeks after Exxon Mobil said that it would acquire Pioneer Natural Resources for about $60 billion.
Crude prices are up 9 per cent this year and have been hovering around $90 per barrel for about two months.
Chevron said on Monday that the acquisition of Hess adds a major oil field in Guyana as well as shale sites in the Bakken Formation in North Dakota.
We’ve entered into an agreement to acquire @HessCorporation. This acquisition would add world-class assets and people and is expected to enhance and extend our production and free cash flow growth into the 2030s. Read more and tune in to our webcast here: https://t.co/ONoKacdmCQ
Advertisement— Chevron (@Chevron) October 23, 2023
Chevron is paying for Hess with stock. Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. Including debt, Chevron valued the deal at $60 billion.
Chevron said the deal will help to increase the amount of cash given back to shareholders.
The company anticipates that in January it will be able to recommend boosting its first-quarter dividend by 8 per cent to $1.63. This would still need board approval.
The company also expects to increase stock buybacks by $2.5 billion to the top end of its guidance range of $20 billion per year once the transaction closes.
The boards of both companies have approved the deal, which is targeted to close in the first half of next year. It still needs approval by Hess shareholders.
Shares in Chevron declined nearly 3 per cent before the opening bell on Monday while Hess’s stock rose slightly.
