Chevron is laying the groundwork to swiftly close its planned acquisition of smaller oil producer Hess, according to two sources and an industry analyst, including by preparing a severance program for some Hess workers. The preparations come as both companies await a decision in a legal challenge from larger rival Exxon Mobil that will make or break the $53 billion deal.
Completing the Hess acquisition is key to Chevron CEO Mike Wirth’s strategy. Chevron would gain Hess’ 30% interest in the Stabroek oilfield block in Guyana, which is operated by Exxon and holds more than 11 billion barrels of oil equivalent, providing a critical addition to Chevron’s declining oil and gas reserves.
Chevron has assigned roles in its information technology team to work on the Hess integration, according to an internal organizational chart that Reuters reviewed.
Members of that team have met regularly with counterparts at Hess in recent months to prepare logistics of combining the two companies, said one Chevron employee and a second source familiar with the meetings. Both sources declined to be named while discussing the confidential work.
Representatives from Chevron have also held several town hall meetings with Hess staff, the second source said.
Hess employees were informed they could request a severance package if they are not interested in a position with the combined company, according to a written notice to staff that was seen by Reuters. Chevron is in the midst of a restructuring that includes laying off up to 20% of its workforce, and Hess had about 1,800 employees at the end of 2024. The preparations are intended to help Chevron with ambitious targets for closing the deal. The company aims to legally close the acquisition within 48 hours of resolving the arbitration and complete operational aspects of absorbing the company within 45 days, one of the sources said.
It can typically take several months for companies to close an acquisition after a deal is announced. Exxon, for example, announced it planned to acquire Pioneer Natural Resources in October 2023 and closed the deal in May last year.
“We look forward to completing the transaction and welcoming Hess to our company,” a Chevron spokesperson said in a statement.
Hess declined to comment.
Chevron initially expected to close the Hess acquisition in the first half of 2024. That was delayed due to arbitration claims from Exxon and CNOOC, the other minority partner in the Guyana joint venture, who argue that they have a contractual right of first refusal to purchase Hess’ stake in the Stabroek block.
Hess and Chevron argue the clause does not apply to the sale of the whole company. If they lose the arbitration or are unable to agree on an acceptable resolution with Exxon and CNOOC, the acquisition would fail, according to the terms of the deal. Biraj Borkhataria, an analyst with RBC Capital Markets, met with Chevron Chief Financial Officer Eimear Bonner in June and said the executive acknowledged that the lengthy arbitration dispute has weighed on the company’s stock price, but also said the time has allowed for integration planning. Bonner indicated
Chevron could close the deal quickly after resolving the arbitration dispute, Borkhataria said in an interview.
A three-member arbitration panel that reviewed the dispute over the Stabroek block has reached a decision, Reuters reported on Thursday. The Paris-based International Chamber of Commerce, which is overseeing the arbitration case, is now reviewing the decision before it is released to the parties.
(Reporting by Sheila Dang in Houston; Editing by David Gregorio)