US oil and gas major Chevon is to buy Hess, another US oil and gas producer, for $60 billion, less than two weeks after ExxonMobil announced its acquisition of Pioneer for nearly $65 billion.

Deal after deal in the oil & gas sector. Less than two weeks after a deal worth almost $65 billion (including debt), a $60 billion transaction has just been announced. These are harbingers of consolidation in the industry, particularly in the shale sector.

Texas-based Chevron announced in a press release that it had acquired Hess, another US oil and gas producer (net profit of $2.2 billion in 2022), while two weeks ago ExxonMobil announced the acquisition of Texas-based Pioneer Natural Resources, also active in shale gas in the USA (net profit of $7.8 billion on sales of $24.29 billion).

This latest deal, valued at around $64.5 billion, should further anchor ExxonMobile in the Permian Basin, a major oilfield covering parts of Texas and New Mexico. It is billed as ExxonMobile's biggest acquisition since its mega-merger with compatriot Mobil in 1999.

A good catch for Chevron

The transaction between Chevron and Hess is estimated at $60 billion, including debt, the companies said. It should also be finalized in the first half of 2024.

With this transaction, Chevron acquires Hess's positions in the Stabroek offshore oil block off Guyana (South America), an oil field that is whetting the appetite of oil companies with its 11 billion barrels of oil equivalent. Some 30% will be operated by Chevron at the end of the transaction.

Hess also brings the other Texas giant a stable natural gas business in Southeast Asia and a presence in the shale-oil-rich Bakken Basin (North Dakota), as well as in the deep waters of the Gulf of Mexico and Gulf of Thailand.

Climate impact

The two groups will not be able to avoid a few pitfalls, namely the legal actions brought by numerous American counties and states (including California) against the fossil fuel activities of the two groups.

Chevron posted record profits of $35.5 million in 2022 last year. Oil is currently trading above $87 a barrel, a historically high level.

A.D.