The Smartencyclopedia Staff & Agencies
US energy giant Chevron announced a deal to buy Hess for $53 billion, as major oil producers hit record profits amid soaring prices.
The Chevron-Hess deal comes less than two weeks after Exxon Mobil announced it would buy Pioneer Natural Resources for around $60 billion (£49 billion).
Crude oil prices have risen 9% this year and have hovered around $90 (£74) a barrel for about two months.
Chevron said Monday that the Hess acquisition would add a major oil field in Guyana as well as shale sites in the Bakken Formation in North Dakota.
Chevron paid Hess in stock. Hess shareholders will receive 1.0250 Chevron shares for each Hess share. Including debt, Chevron values the deal at $60 billion.
Chevron said the deal will increase the amount of cash returned to shareholders.
We’ve entered into an agreement to acquire @HessCorporation. This acquisition would add world-class assets and people and is expected to enhance and extend our production and free cash flow growth into the 2030s. Read more and tune in to our webcast here: https://t.co/ONoKacdmCQ
— Chevron (@Chevron) October 23, 2023
The company expects that in January it may propose increasing its first-quarter dividend by 8% to $1.63 (£1.34). This still requires board approval.
The company also plans to increase its share buybacks by $2.5 billion (£2.1 billion) to the top of its forecast range of $20 billion (£16 billion). each year after the transaction is completed.
The boards of directors of both companies have approved the deal, which is expected to close in the first half of next year. It still must be approved by Hess shareholders.
Chevron shares fell nearly 3% pre-market Monday, while Hess shares rose slightly.