Chevron Corporation has officially completed its acquisition of Hess Corporation, marking a transformative milestone in the energy sector. This strategic merger creates a premier integrated oil and gas company with a highly advantaged and diversified portfolio, positioning Chevron for sustained growth and enhanced shareholder value well into the next decade. The acquisition was finalized following the satisfaction of all closing conditions, including a favorable arbitration outcome regarding Hess’s offshore Guyana asset, a critical component of the combined company’s asset base.
The merger brings together world-class assets, including Chevron’s leadership in the Permian Basin, Gulf of America, DJ Basin, Kazakhstan, Eastern Mediterranean, and Australia, with Hess’s significant holdings in Guyana and the U.S. Bakken shale. Chevron now holds a 30% stake in the Guyana Stabroek Block, boasting over 11 billion barrels of oil equivalent discovered recoverable resources, alongside 463 thousand net acres in the Bakken and complementary assets producing 31 thousand barrels of oil equivalent per day in the Gulf of America and 57 thousand barrels per day in Southeast Asia.
Financially, Chevron reported revenues of \(202.8 billion and a net income attributable to the parent company of \)17.66 billion for the fiscal year 2024. The acquisition is expected to be accretive to cash flow per share starting in 2025, driven by synergies and the startup of the fourth floating production storage and offloading vessel in Guyana. Chevron anticipates achieving \(1 billion in annual run-rate cost synergies by the end of 2025, with a capital expenditure budget between \)19 billion and $22 billion, targeting a sustained double-digit Return on Capital Employed (ROCE) at mid-cycle prices.
This acquisition aligns with Chevron’s strategic focus on capital and cost efficiency, free cash flow growth, and shareholder returns. CFO Eimear Bonner emphasized the transaction’s potential to drive significant free cash flow and production growth into the 2030s, reinforcing Chevron’s position as a leader in the global energy market.
The merger also brings leadership continuity, with John Hess, former CEO of Hess Corporation, expected to join Chevron’s Board of Directors, adding valuable industry expertise and relationships.
This development follows Chevron’s recent acquisition of PDC Energy in 2023, further expanding its footprint in key U.S. basins. The Hess acquisition, valued at approximately $53 billion in an all-stock transaction, represents a significant step in Chevron’s growth trajectory, enhancing its portfolio with high-quality assets and operational capabilities.
In summary, Chevron’s acquisition of Hess Corporation is a landmark event that strengthens its integrated energy business, enhances production and cash flow growth prospects, and positions the company for long-term value creation in a dynamic energy landscape.
For detailed information, refer to the original 8-K filing here: Chevron 8-K Acquisition of Hess.
Tags: CVX, Chevron Corporation, FY2024, Hess Acquisition, Oil and Gas Integration, Free Cash Flow Growth