Transaction will boosts Chevron’s forecast five-year production and free cash flow growth rates, which are expected to continue throughout the following decade. Capital expenditures for the merged firm are estimated to range between $19 and $22 billion. Chevron aims to expand asset sales and earn $10 to $15 billion in before-tax proceeds through 2028 with a stronger portfolio following the completion.
Chevron Corporation has signed a formal agreement with Hess Corporation to buy all of Hess’s outstanding shares in an all-stock transaction valued at $53 billion.
Hess stockholders will get 1.0250 Chevron shares for each Hess share, according to the terms of the agreement.
Chevron’s equity is used in the acquisition transaction, structured as 100 percent stock deal. Chevron will issue about 317 million shares of common stock upon the transaction’s completion. The total enterprise value of $60 billion comprises net debt and non-controlling interest book value.
The transaction has been unanimously authorised by both businesses’ boards of directors and is scheduled to conclude in the first half of 2024.
Hess Corporation is a significant worldwide independent energy firm involved in crude oil and natural gas exploration and production. Hess own assets in offshore Guyana. Hess also has strong footprints in Bakken shale formation in North Dakota, along with assets in deepwater Gulf of Mexico and the Gulf of Thailand.
The Stabroek block in Guyana is a remarkable asset with industry-leading cash margins and low carbon intensity, and it is anticipated to produce production increases over the next decade. Hess’ Bakken assets boost domestic energy security by adding another premier U.S. shale position to existing Chevron’s portfolio.
The merged business will expand output and free cash flow quicker and for a longer period of time than Chevron’s existing five-year projection.
Furthermore, John Hess is scheduled to join the Chevron Board of Directors.
Chevron’s already strong portfolio is strengthened and diversified by the acquisition of Hess.
Transaction will be strategic for Chevron due to underlying energy assets of Guyana – 30% ownership in more than 11 billion barrels of found recoverable oil equivalent, with good cash margins per barrel, a robust production growth projection, and possible exploration upside. Bakken has 465,000 net acres of high-quality, long-duration inventory underpinned by Hess Midstream’s integrated assets. Complementary Gulf of Mexico assets and consistent free cash flow from the natural gas sector in Southeast Asia.
Transaction will boosts Chevron’s forecast five-year production and free cash flow growth rates, which are expected to continue throughout the following decade. Capital expenditures for the merged firm are estimated to range between $19 and $22 billion. Chevron aims to expand asset sales and earn $10 to $15 billion in before-tax proceeds through 2028 with a stronger portfolio following the completion.
Following the transaction, Chevron aims to expand share repurchases by $2.5 billion to the high end of its projection range of $20 billion per year in the event that oil prices continue to rise.
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