Chevron's $53B Hess Deal Faces Uncertainty Amid Exxon And CNOOC Arbitration Claims

Exxon Mobil Corp XOM and its partner CNOOC Ltd have filed arbitration claims, asserting their right of first refusal to any sale of Hess Corp‘s HES stake in a Guyana oil-producing joint venture. This move could potentially hinder Chevron Corp‘s CVX proposed $53 billion acquisition of Hess. The arbitration panel is now expected to hear these claims in May 2025, further delaying the deal.

What Happened: The arbitration panel’s decision is now anticipated in the second half of 2025, Reuters reported. This delay adds pressure on Chevron and Hess investors. Hess had previously expressed its desire for the case to be heard by the third quarter and the arbitration to be completed by year-end.

The proposed deal, announced in October, would give Chevron a 30% stake in the consortium controlling all of Guyana’s oil production. Exxon leads the consortium with a 45% stake. The deal is Chevron’s largest in over two decades.

Exxon has argued that its right of first refusal clause, as per the Guyana joint operating agreement with Hess and CNOOC, was triggered by the Chevron bid. However, Chevron and Hess dispute this claim.

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Why It Matters: The delay comes amid a tumultuous time for the oil industry. Former President Donald Trump recently accused OPEC of manipulating oil prices to favor Vice President Kamala Harris, adding to the industry’s uncertainty.

The potential for a shift in the political landscape has also been a cause for concern, with oil stocks seeing declines amid speculation that Harris could take a tougher stance on the industry.

Additionally, the ongoing arbitration case with Exxon, which claims a right of first refusal over Hess's main asset in Guyana, has also been a point of contention, delaying the FTC's review of the acquisition. The arbitration case is expected to extend into the fourth quarter, further complicating the timeline for the acquisition.

Price Action: Chevron Corp’s stock closed at $160.47 on Wednesday, up 0.56% for the day. In after-hours trading, the stock increased 0.19%. Year to date, Chevron’s stock has appreciated by 7.35%.

Meanwhile, Hess Corp’s stock closed at $153.42 on the same day, up 1.14% for the day. In after-hours trading, the stock declined 3.01%. Year to date, Hess’s stock has risen by 5.97%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote