Tuesday, July 23, 2024
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US oil company Chevron buys Hess

US oil giant Chevron announced the purchase of Hess for $53 billion amid rising crude oil prices.

Crude oil prices have jumped 9 per cent this year and remain at around $90 a barrel for about two months now.

The Chevron-Hess deal came less than two weeks after Exxon Mobil announced it would purchase Pioneer Natural Resources for about $60 billion. Chevron stated on Monday that the Hess acquisition would add a large oil field in Guyana as well as shale acreage in the Bakken Formation in North Dakota.

The company valued the deal at $60 billion including debt. It will pay for Hess with stock and Hess shareholders will receive 1.0250 Chevron shares for each Hess share.

Chevron expects to increase its first-quarter dividend in January by 8% to $1.63, but such a decision will still be made at the board of directors. It also expects to increase share repurchases by $2.5 billion to the top end of its guidance range of $20 billion a year after the deal closes.

While both companies’ boards have approved the deal, which is expected to close in the first half of next year, it still requires approval from the Hess shareholders.

Chevron shares fell nearly 3 per cent before the trading opened on Monday, while Hess shares rose slightly.

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