As oil prices surge, Chevron announced it will purchase Hess Corp. for $53 billion. The acquisition comes weeks after Exxon Mobil announced its deal to acquire Pioneer Natural resources for $60 billion.
These two megadeals announced this month are the largest deals the energy sector has seen in the 21st century.
“This combination is aligned with our objective to safely deliver higher returns and lower carbon,” Mike Wirth, Chevron Chairman and CEO, said. “In addition, Hess increases Chevron’s estimated production and free cash flow growth rates over the next five years, and is expected to extend our growth profile into the next decade supporting our plans to increase our peer-leading dividend growth and share repurchases.”
Both boards of Chevron and Hess approved the deal; Chevron is paying for Hess with stock. According to the AP, “Hess shareholders will receive 1.0250 shares of Chevron for each Hess share.”
Chevron said the acquisition of Hess will add “a major oil field in Guyana as well as shale properties in the Bakken Formation in North Dakota,” Associated Press (AP) reported. Guyana, located in South American, is likely to become the world’s fourth-largest offshore oil producer.
In a letter to the Chair of the Federal Trade Commission Chair Lina Khan, 23 U.S. Senators warned against the acquisition citing it will harm competition, suppress wages for workers, and worsen the effects of climate change.
“Allowing Big Oil to become Monster Oil will increase consumers’ pain at the pump and consolidate their political grip over Capitol Hill to stop action on climate change,” Tyson Slocum, director of Public Citizen’s Energy Program, said.
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