Chevron will buy Hess Corp. for $53 billion in one of the biggest acquisitions in energy this month, just after Exxon Mobil said it would acquire Pioneer Natural Resources for $60 billion.
According to a report by the Associated Press, both deals come as most major producers are seeking investment while oil prices surge amid global tensions. Oil prices have been rising due to Russia’s invasion of Ukraine, and now the Israel-Hamas war is threatening to ignite a broader conflict in the Middle East that could potentially disrupt oil supply and raise prices.
The Hess acquisition would add a major oil field in Guyana, the world’s fourth-largest offshore oil producer. Chevron will pay Hess with stock, and its shareholders will receive 1.025 shares of Chevron for each Hess share.
The company said the deal would increase the amount of cash given back to shareholders and anticipated that in January it would be able to recommend boosting its-first quarter dividend by $8% to $1.63.
Chevron CEO Mike Wirth said the acquisition is aligned with their objective to deliver higher returns and lower carbon emissions.
“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,” Wirth added.
Both companies’ boards announced the approval of the deal after six months of negotiations, and is expected to close in the first half of the next year.