Chevron has completed its $53 billion acquisition of Hess, after prevailing against Exxon Mobil in a legal dispute over offshore oil assets in the South American nation of Guyana.
The ruling by the International Chamber of Commerce is a huge win for Chevron, which had sought to buy Hess to gain access to the vast Guyana oil reserves.
“We have maintained from the beginning that this is the outcome that we expected. It’s a straightforward interpretation of contract language, and we’re very pleased that the transaction has now closed,” said Chevron CEO Mike Wirth on CNBC’s “Squawk on the Street” Friday. “Good for Chevron and also good for the industry because it affirms a long standing practice that asset level rights of refusal don’t apply in corporate level M&A transactions.”
Exxon CEO Darren Woods first revealed the dispute’s outcome to CNBC’s Becky Quick earlier Friday.
Chevron shares were about 1% lower during Friday’s session after rising more than 2% in the premarket on the announcement. Exxon stock, meanwhile, fell nearly 2%.
“We disagree with the ICC panel’s interpretation but respect the arbitration and dispute resolution process,” Exxon said in a statement Friday.
The dispute had created significant uncertainty over whether Chevron’s acquisition of Hess would close, weighing on Chevron’s stock performance. The transaction would have failed if Exxon had prevailed.
Exxon and China National Offshore Oil Corporation had filed an arbitration case with the ICC, claiming a right of first refusal over Hess’s assets in the Stabroek Block, an oil development off the coast of Guyana.
Hess has a 30% stake in the oil patch, while Exxon leads the project with a 45% stake and CNOOC maintains 25% stake.
“We welcome Chevron to the venture and look forward to continued industry-leading performance and value creation in Guyana for all parties involved,” Exxon said.
As the combination moves ahead, Wirth told CNBC said he anticipates “some” headcount reductions. Chevron had already been reducing staff, after announcing in February plans to lay off 15% to 20% of its workforce in an effort to cut costs.
“We’ll integrate the two companies. As is typical in a deal like this, there are some overlaps, and so you’ll see some reductions,” Wirth said. “But our industry is like many others where you have to continually look to be efficient, and technology evolves. It’s a competitive world out there.”