Hess Guyana's secret value becomes part of Exxon arbitration, sources say
Panel to consider independent appraisal of Hess Guyana
Exxon sees Chevron-Hess merger as disguised asset buy, say sources
Hess Guyana makes up 70% of Chevron's $53 bln bid, say analysts
Chevron, Hess see appraisal as irrelevant to arbitration case
By Sabrina Valle
Aug 20 (Reuters) -An arbitration panel that will decide a high-profile clash between Exxon Mobil XOM.N and Chevron CVX.N will delve into the secret value of Hess' HES.N oil riches in Guyana,four people familiar with the matter said.
Chevron CVX.N last October offered to pay $53 billion for Hess, one of the two biggest deals in the largest wave of consolidation in the oil industry in decades. The asset most coveted by Chevron in the takeover is Hess’s stake in a Guyana field operated by top U.S. rival Exxon.
Exxon and China's CNOOC 0883.HK, another partner in the venture, have challenged the deal, claiming a contractual first right to buy Hess’s stake in the field, a matter to be decided by a three-person arbitration panel.
Getting the panel to consider the appraised value is central to Exxon's claim that the deal is an asset acquisition disguised as a merger. Exxon believes the Guyana asset is so valuable that the merger would trigger a change of control and give Exxon and CNOOC a right of first refusal to the asset sale, the people said.
On the other hand, Chevron and Hess do not believe the Guyana valuation will have any bearing on the panel's view of the contract arbitration. Their position is Exxon's right does not apply because there is no change in Hess' control of its Guyana unit, people familiar with their thinking said.
Valuation can be a critical and lengthy step in change of control disputes, said Christopher B. Strong, a vice president at trade group Association of International Energy Negotiators (AIEN) and a partner at Vinson & Elkins law firm, which has done work for Exxon.
The prize in the contest is Hess' 30% stake in the Stabroek offshore Guyanajoint venture with some 11.6 billion barrels in oil and gas discovered so far. The consortium, which includes Exxon with a 45% stake and CNOOC with 25%, operates all of Guyana's output and earned $6.33 billion in profits last year by pumping 137 million barrels of oil. That output is expected to more than triple by 2027.
Exxon CEO Darren Woods told Reuters earlier this year he would consider a counterbid for all or part of Hess Guyana's stake, but only after the arbitration panel accepts its claim to first right, and a price has been determined.
Woods' position remains unchanged, people familiar with his thinking said this month. Wall Street analysts estimate Hess Guyana represents about 70% of Chevron's $53 billion bid.
NO COMPROMISE
The case hinges on whether a change of control in Hess Guyana will occur. The deal is structured so Hess will remain intact and become an affiliate of Chevron, the two companies have said.
"Exxon and CNOOC continue to ignore the plain language of the operating agreement, and Chevron and Hess remain confident that the arbitration will confirm that the Stabroek ROFR (right of first refusal) does not apply to the merger," the companies said in response to Reuters questions.
Chevron CEO Michael Wirth recently dismissed the chance of any compromise with Exxon and CNOOC. The companies had held talks earlier this year, but they halted when Exxon filed the arbitration case.
"It doesn't appear that (a compromise) is how this is going to end up," Wirth said on Aug. 2.
However, if the panel accepts the right of first refusal applies, Hess has said it willnot sell its Guyana stake to Exxon or CNOOC. Hess will remain independent if the Chevron deal is quashed, CEO John Hess said earlier this year.
PRESSURE ON CHEVRON
Chevroncould use a Guyana boost. Its profits have fallen for the last six quarters on a year-over-year basis. Its share price has dropped 8.7% in the last 52 weeks, compared witha 7.7% increase at rival Exxon.
In May, Exxon closed its $60 billion acquisition of top U.S. shale oil producer Pioneer Natural Resources, which was the biggest acquisition in the latest consolidation wave. The deal helped Exxon deliver $9.24 billion in second-quarter earnings, more than twice Chevron's profit for the same period.
"(Exxon) is in the best shape I've seen it in 20, 25 years. It has put itself in a remarkable position," said oil analyst Paul Sankey.
Meanwhile, Chevron'sCEO is shaking up the company, replacing lieutenants and relocating the company's headquarters to Texas from California. Wirth also aims raise up to $15 billion from asset sales, after the Hess deal closes.
He had hoped to close the deal in the first half of 2024, and thedelay stalls Chevron's ability to reap cost savings, staffing and operating synergies in addition to slowing its asset sales. Hess shareholders miss out on getting Chevron's much higher dividend payments, which was a lure for the deal.
A second-half 2025 closing could pressure Chevron into a settlement that lessens promised deal benefits, analysts and investors said. But if the valuation proves to be higher than Exxon expects, it also could make a counterbid more expensive.
"Exxon may be creating enough uncertainty in the situation that it'll be worthwhile for Chevron to perhaps give up some economics in order to get this thing resolved," said Roy Behren, co-president at Westchester Capital Management, which owned nearly $226 million in Hess stock at the end of June, according to LSEG.
Exxon-led Guyana oil group's net jumps in 2023, margins top Nvidia's https://www.reuters.com/business/energy/exxon-led-guyana-oil-groups-net-jumps-2023-margins-top-nvidias-2024-06-25/
Exxon clash with Chevron hinges on change of control of Hess' Guyana asset, sources say https://www.reuters.com/business/energy/exxon-clash-with-chevron-hinges-change-control-hess-guyana-asset-sources-say-2024-07-18/
Chevron earnings slide, Hess merger arbitration drags on /www.reuters.com/business/energy/chevron-reports-q2-miss-hess-takeover-faces-new-delays-2024-08-02/
Guyana's oil output to peak at 1.9 million boepd - Rystad Guyana's oil output to peak at 1.9 million boepd - Rystad https://reut.rs/4d0dCVv
Reporting by Sabrina Valle; editing by Gary McWilliams and Marguerita Choy
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නවතම පුවත්
වියාචනය: XM Group සමාගම් ක්රියාත්මක කිරීම පමණක් වන සේවා සපයන අතර වෙබ් අඩවියේ හෝ වෙබ් අඩවිය හරහා ලබා ගත හැකි අන්තර්ගතය බැලීමට සහ/හෝ භාවිත කිරීමට පුද්ගලයෙකුට ඉඩ සලසමින් අපගේ මාර්ගගත වෙළඳ පහසුකම වෙත ප්රවේශය ලබා දෙන අතර වෙනස් කිරීමට හෝ පුළුල් කිරීමට අදහස් නොකරයි. එවැනි ප්රවේශය සහ භාවිතය සෑම විටම (i) නියමයන් සහ කොන්දේසි, (ii) අවදානම් අනතුරු ඇඟවීම් සහ (iii) සම්පූර්ණ වියාචනයට යටත් වේ. එබැවින් එවැනි අන්තර්ගතයක් සාමාන්ය තොරතුරුවලට වඩා වැඩි යමක් සපයා නොමැත. විශේෂයෙන්ම, අපගේ මාර්ගගත වෙළඳ පහසුකමේ අන්තර්ගතය පෙළඹවීමක් හෝ මූල්ය වෙළඳපොළවල කිසිදු ගනුදෙනුවක් සිදු කිරීමට ඉදිරිපත් කිරීමක් නොවන බව කරුණාවෙන් සලකන්න. ඕනෑම මූල්ය වෙළඳපොළක වෙළඳාම් කිරීම ඔබේ ප්රාග්ධනයට සැලකිය යුතු අවදානමක් එක් කරයි.
අපගේ මාර්ගගත වෙළඳ පහසුකමේ ප්රකාශිත සියලු කරුණු අධ්යාපනික/තොරතුරුමය අරමුණු සඳහා පමණක් අදහස් කෙරෙන අතර මූල්ය, ආයෝජන බදු හෝ වෙළඳ උපදෙස් සහ නිර්දේශයන්; හෝ අපගේ වෙළඳ මිල පිළිබඳ වාර්තාවක්; හෝ ඕනෑම මූල්ය උපකරණයක ඉදිරිපත් කිරීමක් හෝ ඒ සඳහා පෙළඹවීමක්; හෝ විශේෂ ඉල්ලීමකින් තොරව ඔබ වෙත ලබා දෙන ලද මූල්ය ප්රවර්ධනයන් ලෙස නොසැලකිය යුතුය.
ඕනෑම තෙවන පාර්ශවීය අන්තර්ගතයක් මෙන්ම XM විසින් සකසන ලද අන්තර්ගතය එනම් අදහස්, පුවත්, පර්යේෂණ, විශ්ලේෂණ, මිල ගණන් සහ වෙනත් තොරතුරු හෝ මෙම වෙබ් අඩවියේ අන්තර්ගත තෙවන පාර්ශවීය වෙබ් අඩවි සඳහා සබැඳි සාමාන්ය වෙළඳපොළ විවරණයක් ලෙස "පවතින පරිදි" සපයා ඇති අතර එහි ආයෝජන උපදෙස් ඇතුළත් නොවේ. ඕනෑම අන්තර්ගතයක් ආයෝජන පර්යේෂණයක් ලෙස අර්ථ දක්වා ඇති ප්රමාණයට, ආයෝජන පර්යේෂණයේ ස්වාධීනත්වය ප්රවර්ධනය කිරීමට නිර්මාණය කර ඇති නෛතික අවශ්යතාවලට අනුකූලව අන්තර්ගතය සකසා නොමැති බවත් එලෙස අරමුණු කර නොමැති බවත් ඔබ සලකා පිළිගත යුතු අතර එබැවින් එය අදාළ නීති සහ රෙගුලාසි යටතේ අලෙවිකරණ සන්නිවේදනයක් ලෙස සලකනු ලැබේ. ඉහත සඳහන් තොරතුරු සලකා මෙතනින් ප්රවේශ විය හැකි, ස්වාධීන නොවන ආයෝජන පර්යේෂණ සහ අවදානම් අනතුරු ඇඟවීම පිළිබඳ අපගේ දැනුම්දීම ඔබ කියවා තේරුම් ගෙන ඇති බව සහතික කර ගන්න.
