Chevron CEO Sees Hess Deal Completion Despite Legal Delays — OPIS

Chevron officials remain optimistic about the company's $53 billion effort to buy Hess Corp. even as arbitration hearings on a dispute holding up the deal won't happen for nearly a year.

In a Friday call to discuss the company's second-quarter financial results, Chief Executive Mike Wirth said he expects the Federal Trade Commission will complete its review of the deal in the third quarter. But an arbitration panel hearing a dispute with Exxon over Hess' 30% stake in a joint operating agreement over offshore energy fields in Guyana will not begin until 2025.

Chevron and Hess on Wednesday said the panel was expected to hear the matter in May.

"Hess had requested an earlier hearing, but the panel ultimately sets the schedule," Wirth said. "We remain confident this is a straightforward matter. We are committed to the merger and look forward to combining the two companies." Wirth said a compromise with Exxon was "sensible," adding that Hess and Chevron had worked to find a resolution that satisfied the interests of all the involved parties.

"That time has now passed, and we're in the arbitration process, so that's the path that we're on," he said.

The arbitration schedule will significantly delay the deal, which was approved by Hess shareholders in May. At the time, Chevron officials said they expected the FTC to wrap up its review by mid-year. Hess had requested the arbitration panel hear the Exxon case in the third quarter and make a decision in the fourth quarter.

Exxon in March filed for arbitration over the joint operating agreement in the Stabroek Block offshore Guyana. Exxon holds a 45% stake in the partnership while China National Offshore Oil Corp. has a 25% share.

Exxon has argued the partnership agreement gives it the right of first refusal over the purchase of Hess' stake in the block.

The company reported Q2 earnings of $4.434 billion, down 26% from the same period of 2023.

Chevron officials blamed the lower earnings largely on weaker refining margins and refinery maintenance at times when margins were stronger.

The company said Q2 crude unit inputs at its U.S. refineries fell 9% year to year mostly because of downtime at its 290,500 b/d El Segundo, Calif., refinery.

"We had some turnaround activity in the second quarter that occurred during the more attractive margin portion of the quarter. Then we had more capacity back online as margins dropped precipitously in some cases, so we didn't capture as much as we could because of the timing of some of our activity," Wirth said.

Chevron reported an 11% year-to-year rise in global net oil-equivalent production, driven by strong performance in both the Permian and Denver-Julesburg basins in the U.S. and the company's purchase last year of PDC Energy, which included facilities in both basins.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Steve Cronin, scronin@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com

(END) Dow Jones Newswires

August 02, 2024 16:02 ET (20:02 GMT)

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