One of the largest oil companies in the U.S. has reached a deal to acquire a smaller competitor in the latest sign that a wave of consolidation may be sweeping over the American oil and gas industry.
Chevron will be acquiring Hess for $53 billion in a stock-for-stock deal, the two companies announced Monday. Chevron, the second-largest U.S. oil company, will assume Hess’ assets in the Bakken shale region of North Dakota, as well as its key holdings in Guyana as a result of the deal, according to the joint press release, the second major oil and gas industry acquisition of the month following ExxonMobil’s $60 billion merger with Pioneer Natural Resources.
“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” Chevron CEO and Chairman Mike Wirth said of the deal. “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.” (RELATED: EXCLUSIVE: GOP Rep Urges Biden Official To Visit Region Where Admin Is Seeking To Curb Drilling To ‘Save A Lizard’)
Chevron keeps pumping https://t.co/w1KPkdyvB3
— Daily Caller (@DailyCaller) November 27, 2022
Chevron has signaled that it expects the deal to receive final approval from Hess shareholders and various regulators, before closing at some point in the first half of 2024, according to The Wall Street Journal. The Chevron deal follows a June estimate from the International Energy Agency that global oil demand will peak in 2028.
The deal indicates that Chevron remains committed to improving the fossil fuel production that is core to its business despite pressure from environmentalist interests and the Biden administration to transition the U.S. economy towards green energy. Wirth called out the Biden administration in June 2022 for simultaneously undermining the oil and gas industry with its policies while also demanding that producers cut costs to give consumers a break at the pump, accusing the administration of attempting to “criticize, and at times vilify, our industry.”
“This strategic combination brings together two strong companies to create a premier integrated energy company,” Hess CEO John Hess said of the deal. “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.”
Wirth and Hess appeared on CNBC’s “Squawk on the Street” for a joint interview discussing the deal on Monday morning, with both executives conveying their excitement about the merger and their expectations that regulators will not interfere with the deal on the basis that it is unfair for other market participants.
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