ExxonMobil and Chevron, among the world’s largest oil companies, have been in an ongoing dispute over extraordinary assets in the oil fields of Guyana. In October 2023, Chevron announced an agreement to acquire Hess Corporation for $53 billion. Upon closing, this all-stock transaction will give Chevron valuable assets in the rich oil fields of Guyana, the Bakken formation in North Dakota, and the Gulf of Mexico.

In March 2024, ExxonMobil filed an arbitration case before the International Chamber of Commerce in Paris, seeking a right of first refusal over the proposed sale of Hess’s crown jewel assets in Guyana. ExxonMobil’s dispute with Chevron over Hess Corporation’s assets in Guyana has continued to drag out and risks unraveling Chevron’s deal to acquire Hess.

ExxonMobil claims that it has a right of first refusal on the Hess assets in Guyana pursuant to a joint operating agreement entered into between ExxonMobil, Hess, and the China National Offshore Company (CNOOC). ExxonMobil operates the Stabroek block, which is located offshore of Guyana and is one of the largest oil discoveries in recent years. ExxonMobil holds a 45% stake in Stabroek, while CNOOC holds a 25% stake and Hess holds a 30% stake. The joint operating agreement provides the parties with pre-emptive rights with respect to any sale of Hess’s 30% stake in the Stabroek block. Chevron claims that the joint operating agreement rights do not extend to its pending acquisition of Hess.

Chevron’s original goal was to close the Hess deal by mid-2024. However, prolonged arbitration between Chevron and ExxonMobil risks delaying the closing until 2025. If ExxonMobil prevails in the arbitration, the pending deal may be terminated.

Despite the ongoing arbitration proceedings, on May 28, Hess shareholders formally approved the $53 billion all-stock acquisition by Chevron. For each Hess share held, Hess shareholders will receive 1.025 shares of Chevron. The deal will give Chevron a significant stake in Guyana’s valuable oil fields. The deal is expected to increase cash flow and support Chevron’s growth for many years to come.

ExxonMobil has previously stated that it is not interested in acquiring Hess itself. However, it could consider increasing its stake in the Guyana joint venture. The Guyana oil consortium has discovered more than 11 billion barrels of oil.

Approval of the deal by the U.S. Federal Trade Commission (FTC) is still pending. Under Lina Kahn’s leadership at the FTC, multibillion dollar mergers have come under increased scrutiny. Some large mergers and acquisitions have been terminated as a result of antitrust concerns and pressure from the FTC, including Amazon’s proposed acquisition of iRobot and Tapestry’s proposed acquisition of Capri.

The past year has been marked by a number of mega oil merger announcements. In October 2023, ExxonMobil announced its $60 billion acquisition of Pioneer Natural Resources, a large oil and gas exploration and production company. The acquisition was completed in May 2024. In December 2023, Occidental Petroleum announced its $12 billion acquisition of CrownRock, a U.S. shale oil producer.