Chevron’s acquisition of Hess raises challenges related to ExxonMobil and CNOOC’s protection rights

(MENAFN) Following Chevron’s recent $53 billion acquisition of Hess Oil Company in Guyana, Mike Wirth, CEO of Chevron, has reached out to his counterpart at ExxonMobil, Darren Woods, to discuss a potential future collaboration. With this significant transaction, Chevron gains an interest in a large oil project in Guyana, which is a venture in which ExxonMobil and Hess are involved. According to the report, Woods expressed enthusiasm for the collaboration, highlighting that Exxon and Hess have interests in a significant 11 billion barrels of oil and gas reserves located off the coast of South America.

During a telephone conversation last October, Woods highlighted the long-standing partnership between ExxonMobil and Chevron on various global projects, suggesting that this partnership could further expand to growing opportunities in Guyana. Despite the optimistic outlook, the situation quickly became controversial, threatening the stability of Chevron’s massive takeover of Hess.

The report indicated that Exxon officials, together with the Chinese company CNOOC, which is the third partner in the project, confirmed their rights to a “buyout offer” and “right of initial refusal”. These provisions allow Exxon and CNOOC to oppose Chevron’s takeover bid by rejecting the bid outright or by submitting a competing bid that meets Chevron’s terms. This unexpected decision caught Chevron officials by surprise and led to a series of private negotiations with Hess that were ultimately unsuccessful.

The emerging conflict between these oil giants highlights the complexity of large acquisitions in the energy sector, where existing contracts and partnerships can significantly impact the outcome of such transactions. Resolving this issue will be critical for Chevron’s future strategy and operations in Guyana’s lucrative oil fields.

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