After nearly two years, Chevron (CVX) looks set to close its $53 billion deal to buy rival Hess (HES) and clinch access to one of the most significant oil discoveries in decades.
On Friday, an arbitration panel at the International Chamber of Commerce in Paris ruled that Chevron has the go-ahead to close its all-stock purchase of Hess, shutting out rival major bidder ExxonMobil (XOM) and ending one of the biggest standoffs the oil and gas industry has seen in the last 50 years.
After rising early Friday following the news, shares of Chevron were off about 1.5%.
The deal, which Chevron and Exxon have been locked in competition over since 2023, is focused on Hess’ 30% stake in the generationally rich Stabroek offshore block of oil fields off the northern coast of Guyana. The play is estimated to hold more than 11 billion barrels of oil, according to reporting from Reuters.
This is a “once-in-several-lifetimes type of asset,” David Sweeney, co-head of the global energy and resources sector at international law firm Clifford Chance, told Yahoo Finance.
The project has also played a role in turning Guyana, historically one of the poorest countries in the West, into the second-fastest-growing economy in the world, according to the most recent data available from the International Monetary Fund published in April.
“This merger of two great American companies brings together the best in the industry,” Chevron Chairman and CEO Mike Wirth said in a public statement from the company. “The combination enhances and extends our growth profile well into the next decade, which we believe will drive greater long-term value to shareholders.” When reached for comment, Hess referred to Chevron’s public statement.
Exxon, which currently operates the block and holds a 45% stake, has been partnered with Hess on exploration activity in Guyana since 2014, when Hess bought out Shell’s (SHEL) stake in the project. Exxon is also partnered with the China National Offshore Oil Corporation (CNOOC), which holds a 25% stake.
“We disagree with the ICC panel’s interpretation but respect the arbitration and dispute resolution process,” Exxon wrote in a statement following the ruling. “Given the significant value we’ve created in the development of the Guyana resource, we believed we had a clear duty to our investors to consider our preemption rights to protect the value we created through our innovation and hard work at a time when no one knew just how successful this venture would become.”
The Chevron logo is displayed at a Chevron gas station on Oct. 28, 2022, in Los Angeles, Calif. (Mario Tama/Getty Images) ·Mario Tama via Getty Images
Shortly after Chevron announced its plan to acquire Hess for $53 billion in October 2023, Exxon moved to block the deal, arguing alongside CNOOC that its partnership agreement with Hess gave Exxon a preemptive right to match Chevron’s offer for Hess’ 30% stake. That contention had been the central debate among the ICC arbitration panel.
“The majors … are always opportunistic and smart about what they do, so if there is something out there that is worth acquiring, likely they will be willing to acquire it,” Sweeney said.
Among the majors — the world’s biggest fully vertically integrated oil and gas companies, composed of Exxon, Chevron, BP (BP), Shell, TotalEnergies (TTE), and Eni (E) — Exxon and Chevron lead the pack. But this deal has been seen as key to Chevron’s success, as the company has lagged behind Exxon in recent years.
Chevron’s earnings fell from $24.7 billion in 2023 to $18.3 billion in 2024, and in February of this year, the company announced its intent to cull up to 20% of its workforce, or 8,000 employees, by the end of next year.
Chevron’s stock price has also largely lagged behind Exxon’s, growing by roughly 71% over the last five year’s compared to Exxon’s upward rise of just less than 150%. The S&P 500 has gained about 95% over that same period.
“This accretive transaction is expected to drive significant free cash flow and production growth into the 2030s,” Chevron CFO Eimear Bonner said in the company’s public statement following Friday’s news.
“The proposed Hess deal would be transformative for Chevron, adding advantaged oil volumes … and provide geographic diversification,” analysts at Bank of America wrote in a note on July 10. The firm also expects the deal to drive free cash flow, which will put Chevron in a stronger negotiating position for a contract extension on its ownership of a major oil play in Kazakhstan.
The Chevron-Hess merger is one of the largest M&A transactions in the energy sector in the last couple of years, falling just shy of Exxon’s $60 billion acquisition of Permian Basin-concentrated exploration and production company Pioneer Natural Resources, which closed in May 2024.
The sector has already seen more than $150 billion in deal value through the first half of 2025, according to a report from PwC. The report noted that the “how we fuel and power” domain, which encompasses the race to generate power for AI infrastructure, is projected to cross $6 trillion in value by 2035.
While this deal isn’t necessarily predictive of megadeals to come from the majors or in the oil and gas space writ large, Sweeney told Yahoo Finance, a large-scale deal like this is likely to push other companies in the sector to start looking at potential moves.
“I would look at it and ask myself, if I was buying and selling assets and running them, ‘Alright, is there something I can make out of this plus a number of other different acquisitions that I can cobble together?'” Sweeney said.
“The industry is going to be around, and every time there’s an acquisition like this — because this is just one of many — it tends to spur opportunities.”
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
