Fuelin’ Around: Chevron Buys Hess

While coverage of high finance isn’t generally a top priority of this site – we know most of you lot would rather read about Murilee’s latest Junkyard Find and, to be honest, so would I – any deal involving a pair of major fuel station brands is worth more than a passing mention.

In what is being described by talking heads as an “all-stock transaction”, Chevron Corp. has agreed to purchase Hess Corp. for somewhere in the neighborhood of $53 million. With terms generally not understood by this author who frequently requires help with math, Hess shareholders will apparently receive 1.025 shares of Chevron for each Hess share they hold. Chevron went ahead and paid $171 per share for the company they usurped, roughly 10 percent more than its value compared to its average over the last three weeks.

But you know this deal was about more than gaining a few filling stations – much more, as those in the know are all too willing to explain. It seems the acquisition will provide Chevron with a meaningful foothold in Guyana, a spot on our planet described as one of the world’s newest oil producers of note. The purchase of Hess gives them roughly one-third ownership of more than 11 billion barrels equivalent of recoverable resources in that country, plus acreage in the Gulf of Mexico and other areas. Fun times.

The purchase is said to have already been unanimously approved by the fancy-pants boards at both companies and should be completed in the first half of next year. It is also subject to regulatory approvals and other customary closing conditions. Negotiations took about six months or approximately the same amount of time it takes a toddler to eat their vegetables. 

[Images: Chevron, Hess]

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