Chevron, the US energy giant, said on Monday it had agreed to acquire Hess, a mid-sized rival, in an all-stock deal worth $53 billion.
The deal marks further consolidation in the energy industry, particularly in the United States, where smaller companies appear to be taking advantage of relatively high oil prices to merge with larger players. The deal follows Exxon Mobil’s $60 billion purchase of shale driller Pioneer Natural Resources earlier this month, another sign of confidence by major industry players in the future of fossil fuels even as policymakers promote cleaner energy sources.
In a press release, Chevron said the acquisition would diversify its portfolio. Hess would contribute about 10 percent of Chevron’s total oil and gas production of about 3 million barrels per day.
Chevron Chairman and CEO Mike Wirth said in a statement that the deal improves the company’s operations “through the addition of world-class assets.”
Hess has a strong position in Guyana, where major oil discoveries have been made in recent years and Chevron’s rival Exxon is the main operator. Hess is also a leader in the Bakken Shale play in North Dakota.
John Hess, Hess’s chief executive, is expected to join Chevron’s board.
In a note to clients Monday, Biraj Borkhataria, an analyst at RBC Capital Markets, said it was surprising that Chevron struck a high-priced deal while Exxon, the company’s main rival, is out of the hunt because of its multi-billion dollar business. Dollar Pioneer Purchase. He assumed that Chevron “could bide its time.”
Mr. Borkhataria said Hess will give Chevron “a stronger, more diversified portfolio, which should bode well for shareholders in the long term, but in the short term the news could weigh on shares.”
Chevron shares lost around 2.5 percent in premarket trading.
Source : www.nytimes.com