Chevron warns of threat to $53bn Hess deal from ExxonMobil

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Chevron has warned that its planned $53bn acquisition of Hess could be thwarted by rivals ExxonMobil and China National Offshore Oil Corporation, which are asserting their right to pre-empt its purchase of a stake in a Guyana oil project that is central to the deal.

Chevron, the second-biggest US oil company, has been “engaged in discussions” with Exxon and Cnooc — joint owners of the Stabroek Block project — “regarding a right of first refusal provision in the joint operating agreement” for the development, it said in a regulatory filing on Monday.

If the talks did not “result in an acceptable resolution”, or if any subsequent arbitration did not confirm its belief that the right of first refusal did not apply in this case, Chevron said the takeover of Hess would not close. 

The friction underlines the value attached to the Guyana project — the biggest oil find globally in the past decade and the crown jewel of the assets to come with Hess, the largest deal in Chevron’s history.

There was little international interest in Guyana’s hydrocarbon potential until an Exxon-led consortium made a significant discovery off its coast in 2015. In the years since, the group has made more than 30 such discoveries in the area.

In a statement on Monday, Exxon — the biggest US supermajor — said it was “engaged in conversations with Hess and Chevron and those conversations will continue”.

“We owe it to our investors and partners to consider our pre-emption rights in place under our joint operating agreement to ensure we preserve our right to realise the significant value we’ve created and are entitled to in the Guyana asset,” it added.

Shares in Hess fell 4 per cent in after-hours trading, while Chevron’s dropped 1 per cent. Exxon’s shares were little changed.

Jason Gabelman, an analyst at TD Cowen, said the “most…