Exxon Mobil Open to Dialogue with Chevron on Hess Acquisition Deal

Key Takeaway

• Exxon Mobil Corp. is open to discussions with Chevron Corp. regarding its $53 billion acquisition of Hess Corp., focusing on preserving rights in Guyana's oil project.
• The dispute over Hess's 30% stake in Guyana’s Stabroek block, where Exxon holds a 45% stake, has led to arbitration at the International Chamber of Commerce.
• Despite the conflict, Exxon aims to establish the value of Hess's stake through arbitration without pursuing a full acquisition of Hess.

Open Dialogue on Guyana Project

Exxon Mobil Corp. has expressed its willingness to engage in discussions with Chevron Corp. regarding the latter's proposed acquisition of Hess Corp. This openness to dialogue comes amidst a dispute over the implications of the deal for a significant offshore oil project in Guyana. Exxon's CEO, Darren Woods, emphasized in an interview that the company is not opposed to the Chevron-Hess transaction but is focused on preserving its rights related to the Guyana asset. "The channels for dialog remain open," Woods stated, highlighting the business nature of the issue.

Exxon has raised concerns that Chevron's acquisition of Hess, valued at $53 billion, is an attempt to bypass a contract granting Exxon the right of first refusal on Hess’s 30% stake in Guyana’s Stabroek block. This block, where Exxon operates and holds a 45% stake, is recognized as one of the fastest-growing major oil developments globally. Chevron has indicated that it would abandon the Hess deal if it could not secure the Guyana stake as part of the transaction.

Arbitration and Contractual Rights

The dispute has led Exxon to seek arbitration at the International Chamber of Commerce in Paris, marking a rare public confrontation in the oil industry, which typically resolves contract disputes privately. Woods remarked on the unusual nature of the situation, noting that the deal became public before necessary discussions and agreements could be reached among the involved parties. "What happened here is the deal went very public without having the necessary discussions and agreement and alignment or understanding of where the different partners were," he explained.

Exxon's Position on Hess Acquisition

Despite the ongoing dispute, Woods clarified that Exxon is not interested in acquiring Hess in its entirety. Instead, the company aims to establish the value of Hess's stake in the Guyana project through arbitration and then consider purchasing it if successful. This approach underscores Exxon's strategic interest in maintaining its significant involvement in the Guyana oil development, rather than expanding its portfolio through the complete acquisition of Hess.

Management Quotes

• Darren Woods, CEO of Exxon Mobil Corp.:

  "The channels for dialog remain open. This is a business issue — this is not a personal one. We’re not trying to stop the Chevron-Hess transaction. We’re trying to preserve the rights we have for the Guyana asset that we’ve developed."
  "What happened here is the deal went very public without having the necessary discussions and agreement and alignment or understanding of where the different partners were... It got thrown into the public arena before the dialog really started to happen. That in my mind is the big difference between what we’re experiencing now and what we do in other areas where typically it’s happening behind the scenes."