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The chief executives of Chevron Corporation CVX and Hess Corporation HES are confident that they will prevail in the arbitration challenge brought by Exxon Mobil Corporation XOM over a proposed merger valued at $53 billion.
The Chevron-Hess merger,declared in 2023, remains on hold because of the arbitration challenge filed by the partners of the Stabroek block, ExxonMobil (45% operating interest) and CNOOC International (25% interest), claiming that they have a right of first refusal to buy Hess’ 30% interest in the block.
Arbitration Decision Key to Merger Completion
Although the merger has been delayed due to the arbitration challenge, the company has already achieved two approvals to close the deal. The deal has been approved by its shareholders and also gained clearance from the U.S. Federal Trade Commission with the qualification that the chief executive of Hess Corporation cannot join the Chevron board.
The arbitration, which is taking place under the International Chamber of Commerce rules, is slated to be heard in May 2025, and the final decision is expected by September 2025. CVX, currently carrying a Zacks Rank #3 (Hold),and HES are confident of a positive decision in their favor as they view XOM’s claim as baseless and without merit.
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The Future of Guyana’s Stabroek Block
The ExxonMobil-led Stabroek block consortium is delivering remarkable production results, surpassing the sanctioned capacities of its first three projects with 660,000 barrels per day. The exceptional output demonstrates the block’s excellent reservoir quality, predicting higher-than-expected output from future projects. With six projects — three operational and three in progress— the block is aimed at producing about 1.3 million b/d (barrels of oil per day) by 2027. However, Hess forecasts that the figure could reach 1.7 million b/d due to operating efficiency and productivity. Beyond these, unsanctioned projects like Hammerhead and Longtail are also planned for 2028-2029, further boosting the block’s output with promising returns.
The current results and the future prospects of Guyana’s Stabroek Block are motivating factors for Chevron for the alleged Chevron-Hess merger deal.
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Chevron Corporation (CVX) : Free Stock Analysis Report