Intelligence

Chevron acquiring Hess in another $60B blockbuster deal

byMatthew Keillor, Editor, Enverus Intelligence®

Multi-billion-dollar deals are continuing to pile up at an extraordinary pace as 2023 draws closer to its end, this time with Chevron’s all-stock agreement Oct. 23 to acquire Hess Corp., valued at $60 billion including debt. The transaction, expected to close in 1H24, falls just a bit short of the recent high-water mark set by ExxonMobil Oct. 11 with its $64.5 billion deal for Pioneer Natural Resources. It also marks a closing chapter for a company that has been led by the Hess family for 90 years, although CEO John Hess will join the supermajor’s board of directors. The transaction is the second multi-billion-dollar deal of the year for Chevron, which closed its $7.6 billion acquisition of PDC Energy in August.

Hess had more than 5.5 million net acres across the U.S., Guyana, Malaysia, Canada and Suriname as of YE22, according to its 2022 annual report, and proved reserves of 1.26 Bboe (80% liquids). The company produced 387,000 boe/d (74% liquids) in Q2, compared to an average of 344,000 boe/d (72% liquids) in 2022. In comparison, Chevron had YE22 proved reserves of 11.2 Bboe and Q2 production of 2.96 MMboe/d, and the PDC deal added 1.1 Bboe of YE22 proved reserves and 244,000 boe/d of Q1 production.

Currently, Hess’ largest productive asset is its Bakken Shale position in North Dakota, which will be a new play for Chevron. It has 465,000 net acres in the play and produced more than 181,000 boe/d (81% liquids) in Q2. The Bakken is also home to Hess’ integrated midstream assets, which consists of nearly 2,200 miles of pipeline and processing, storage and terminal facilities. In Q2, Hess Midstream – a 50:50 JV between Hess and Global Infrastructure Partners – had gas processing throughput of 358 MMcf/d and gas gathering of 369 MMcf/d. Water gathering volumes were 87,000 bbl/d, while crude terminaling throughput was 108,000 bo/d and crude oil gathering was 94,000 bo/d.

“We’re going to rely very heavily on the good people at Hess that have been involved in the Bakken for many, many years. As we added the DJ Basin to our portfolio, we were pleasantly surprised,” Chevron CEO Mike Wirth said on a conference call, referring to the supermajor’s 2020 acquisition of DJ driller Noble Energy. “And I’m certain that the same will be true as we come together with Hess and see what they’ve been doing in the Bakken.” Wirth added that Chevron estimates the Bakken acreage to hold at least 15 years of inventory at a four-rig drilling pace, calling it “a very attractive asset that can deliver kind of plateau production, strong cash flow for many, many years to come and has that technology upside.” 

Arguably Hess’ most important asset for the future, however, is its 30% stake in the ExxonMobil-operated Stabroek block off Guyana, which holds more than 11 Bboe of discovered recoverable resources with billions of barrels of remaining exploration potential. Hess’ net production from the block was 110,000 bo/d in Q2, almost double the 67,000 bo/d from 2Q22. Exxon and its partners are targeting gross production capacity of over 1.2 MMbo/d by YE27, which would amount to more than 360,000 bo/d net to Hess’ stake.

Stabroek expected to produce 360,000 bo/d net to Hess’ 30% stake by 2027.

Chevron will pick up additional complementary licenses in the U.S. Gulf of Mexico, which are producing 30,000 boe/d (75% liquids), and Malaysian assets that are producing 65,000 boe/d (95% gas). Hess also holds stakes in two exploration licenses off Suriname – Chevron is already a partner on the Shell-operated Block 42 – and two licenses in Canada’s offshore Orphan Basin that are operated by BP.

Chevron will issue about 317 million common shares to complete the deal. The exchange ratio of 1.025 Chevron shares per Hess share represents a 10.3% premium over Hess’ 20-day average closing price as of Oct. 20, the supermajor said. Hess holds nearly $8.5 billion of short- and long-term debt as of Q2, which will bring Chevron’s pro forma Q2 total to almost $30.0 billion. The supermajor said it expects to achieve run-rate synergies of about $1 billion per year within a year of closing, and it will run a combined capex program of $19-22 billion. In addition, the company is targeting $10-15 billion in assets sales through 2028.

John Hess noted on the conference call that his company’s total shareholder returns over the last five years have been the highest in the energy industry and that it was the second-best performer in the S&P 500 last year with a 94% price stock increase. “So basically, we’re not only locking in and preserving the value we created over the last several years, but we still participate in the upside that you’re talking about,” he said of the all-stock deal structure. “On top of that, we get a much higher dividend instead of a $1.75 a share. As a shareholder, you get $6 and then next year you get $6.50, and you have an ongoing strong share repurchase program.”

About Enverus Intelligence Publications
Enverus Intelligence Publications presents the news as it happens with impactful, concise articles, cutting through the clutter to deliver timely perspectives and insights on various topics from writers who provide deep context to the energy sector.

Picture of Matthew Keillor, Editor, Enverus Intelligence®

Matthew Keillor, Editor, Enverus Intelligence®

Matthew Keillor joined Enverus in 2019. As part of the Publications team, he covers oil and gas commodity markets, renewable energy and upstream, financial and M&A activity in the oil and gas sector. Matthew is a graduate of Texas State University.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

How the One Big Beautiful Bill Act could change clean energy tax credit economics
Energy Transition
ByAlex Nevokshonoff, Enverus Intelligence® | Research (EIR) Contributor

The One Big Beautiful Bill Act (OBBBA), enacted on July 4, introduces sweeping changes to U.S. energy policy, significantly altering the tax credit landscape for clean energy projects.

Enverus Press Release - Upstream M&A climbs to $105 billion in 2024
Trading and Risk
ByKiana Cruz

In today’s fast-paced markets; traders don’t just need data, they need decisions. At EVOLVE 2025, the Trading & Risk session, “AI-Powered Trading Intelligence: Streamlining Decision Workflows,” spotlighted how artificial intelligence is evolving from a buzzword to a business-critical tool for...

data-center-demand
Energy Transition
ByAdam Robinson, Enverus Intelligence® | Research (EIR) Contributor

The Texas Tech University (TTU) System and Fermi America announced an 11 GW data center powered by a mix of natural gas, utility grid power, solar, wind and nuclear energy. The newly founded power company is building one of the...

Enverus Press Release - Enverus PRISM® now available for Europe
Trading and Risk
ByKiana Cruz

EVOLVE 2025 brought together leading voices across energy trading, analytics and clean fuels to unpack today’s most pressing market dynamics. From evolving benchmarks to retail analytics, one thing rang loud and clear: adaptation isn’t optional, it’s strategic. We attended four...

Black-lady-with-powerline
Energy Transition
ByCorianna Mah, Enverus Intelligence® Research

A massive heat dome swept across the eastern U.S. last week, driving temperatures into the triple digits and pushing the PJM Interconnection grid to its highest peak load since 2006.

Enverus Press Release - Redesigning ancillary markets: Reliability in a renewable future
Power and Renewables
ByRobin Grathwohl

Are you struggling to find substations with real injection potential? In this blog, you’ll learn how developers use planning models and historical ATC data in PRISM to identify viable POIs, avoid costly surprises in the queue and confidently move forward...

Enverus Press Release - Upstream M&A sails on with $30 billion in 2Q24
Minerals
ByEnverus

Digital oilfield advances have transformed many facets of the energy enterprise, yet when it comes to partner data sharing, the industry is stuck in a rut. Sensitive financial data and personally identifiable information (PII) are routinely sent to working interest,...

Class VI applications signal slowdown
Energy Transition
ByAmyra Mardhani

The U.S. Senate proposed amendments to the One, Big, Beautiful Bill, increasing the 45Q tax credit for CO2 enhanced oil recovery (EOR) from $60 to $85/tonne, matching the rate for permanent sequestration. From an economic standpoint, this shift could have...

Enverus Press Release - Tapping Alberta’s overlooked lithium brines
Oilfield Services
ByAdriana Bickford

The sun rises on a wellsite in North Dakota where hydraulic fracturing operations have been running through the night. A line of water-hauling trucks idles nearby, keeping a steady supply flowing downhole. Handwritten field tickets for those loads exchange hands,...

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert