Hess evaluations timeline for Chevron deal closing after Exxon escalates Guyana dispute

Hess Corp. is reviewing the timeline for when its merger with Chevron will shut after Exxon Mobil this week escalated a dispute over profitable oil property in Guyana.

Exxon filed for arbitration Wednesday to defend what the oil main views as its proper to make a counter supply for Hess’ Guyana property underneath a joint working settlement.

“We disagree with ExxonMobil’s interpretation of the agreement and are confident that our position will prevail in arbitration,” Hess instructed staff in an e-mail Wednesday.

“In light of today’s development, we are reviewing the expected timeline for legal closing and will provide further detail in our next merger update,” Hess wrote.

Chevron entered an settlement in October to purchase Hess for $53 billion, in a play to achieve a foothold in Guyana’s large offshore oil sources.

Hess is a part of a consortium with Exxon and China Nationwide Offshore Oil Company that operates the Stabroek oil block, a large offshore useful resource with an estimated 11 billion barrels of oil and fuel.

Hess has a 30% stake within the Stabroek block. Exxon leads the venture with a forty five% stake whereas CNOOC maintains 25% stake.

Chevron warned investors in a submitting final week that the cope with Hess would terminate if an arbitration courtroom guidelines that Exxon has a proper of first refusal. If that situation performed out, Hess would proceed to function as an impartial firm and retain its stake within the Guyana property, in line with Chevron’s submitting.

Chevron has maintained that the joint working settlement doesn’t apply to its merger with Hess.

Exxon Senior Vice President Neil Chapman mentioned Wednesday that the oil main is “extremely confident in our position that pre-emption rights exist in this contract.” Arbitration disputes can take as much as six months to resolve, Chapman mentioned.

Chapman indicated that Exxon may make a bid for Hess’ stake within the Stabroek block.

“We believe there is opportunity value here, there is option value here,” Chapman mentioned throughout an interview at Morgan Stanley occasion. “If that transaction does not proceed, there is potential value down the road for Exxon Mobil — that option value is really, really important.”

“It would be incomprehensible for us to say ‘well we’re not going to look at that value, we’re just going to let the transaction proceed,'” Chapman mentioned. “You have a responsibility to shareholders.”

Hess mentioned within the Wednesday e-mail that “there is no possible scenario in which Exxon or CNOOC could acquire Hess’ interest in Guyana as a result of the Chevron-Hess transaction.”