Chevron Corporation (NYSE:CVX) has announced an all-stock transaction to acquire Hess Corporation (NYSE:HES) in a deal valued at $53 billion or $171 per share, based on Chevron's closing price on October 20, 2023.
The deal price marks a premium of 10.3% on a 20-day average based on closing stock prices on October 20, 2023.
Under the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share, resulting in a total enterprise value of $60 billion, including debt.
This acquisition will enhance and diversify Chevron's portfolio, with a particular focus on the Stabroek block in Guyana, known for its strong cash margins and low carbon intensity, which is expected to drive production growth into the next decade, Chevron said.
“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” said Chevron Chairman and CEO Mike Wirth.
The addition of Hess' Bakken assets will strengthen Chevron's position in U.S. shale, complementing its operations in the DJ and Permian basins and contributing to domestic energy security.
The combined company is projected to achieve faster and more prolonged production and free cash flow growth compared to Chevron's current five-year guidance. John Hess is expected to join Chevron's Board of Directors as part of this transaction.
“This strategic combination brings together two strong companies to create a premier integrated energy company,” CEO John Hess said.
The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to close in the first half of 2024.
Chevron shares fell 2.6% while Hess stock added 3% in early Monday trade.