SAN RAMON, Calif. — Chevron Corp. is acquiring Hess Corp. for $53 billion.
Under the definitive agreement announced Oct. 23, Chevron acquire all the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron's closing price on Oct. 20.
Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The total enterprise value, including debt, of the transaction is $60 billion.
The acquisition, according to Chevron, will upgrade and diversify the company's already advantaged portfolio. The Stabroek block in Guyana is expected to deliver production growth into the next decade. Additionally, Hess' Bakken assets add another leading U.S. shale position to Chevron's DJ and Permian basin operations and further strengthen domestic energy security.
"This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets," said Chevron Chairman and CEO Mike Wirth. "Importantly, our two companies have similar values and cultures, with a focus on operating safely and with integrity, attracting and developing the best people, making positive contributions to our communities and delivering higher returns and lower carbon."
The combined company is expected to grow production and free cash flow faster and for longer than Chevron's current five-year guidance.
"Building on our track record of successful transactions, the addition of Hess is expected to extend further Chevron's free cash flow growth," said Pierre Breber, Chevron's chief financial officer. "With greater confidence in projected long-term cash generation, Chevron intends to return more cash to shareholders with higher dividend per share growth and higher share repurchases."
Hess CEO John Hess is expected to join Chevron's board of directors.
"This strategic combination brings together two strong companies to create a premier integrated energy company," Hess said. "I am proud of our people and what we have achieved as a company, which has one of the industry's best growth portfolios including Guyana, the world's largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer. Chevron has a world-class diversified portfolio of assets and one of the industry's strongest balance sheets and cash return profiles.
"I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and deliver significant shareholder value for years to come," he added.
The transaction has been unanimously approved by the boards of directors of both companies and is expected to close in the first half of 2024. The acquisition is subject to Hess shareholder approval. It is also subject to regulatory approvals and other customary closing conditions.
Morgan Stanley & Co. LLC is acting as lead financial advisor to Chevron. The company was also advised by Evercore. Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Chevron.
Goldman Sachs & Co. LLC is acting as lead financial advisor to Hess., which was also advised by J.P. Morgan Securities LLC. Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Hess.
New York-based Hess is a global independent energy company engaged in the exploration and production of crude oil and natural gas with leading positions offshore Guyana, the Bakken shale play in North Dakota, the deepwater Gulf of Mexico and the Gulf of Thailand.
San Ramon-based Chevron produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance the business and the industry. It aims to grow its traditional oil and gas business, lower the carbon intensity of its operations and grow new lower carbon businesses in renewable fuels, hydrogen, carbon capture, offsets and other emerging technologies.