A story published at the Wall Street Journal late Monday characterizes Chevron’sCVX proposed $53 billion buyout of Houston-based HessHES Corp. as being “in jeopardy” related to Hess’s 30 percent ownership in the prolific Stabroek Block development offshore Guyana. The massive Stabroek oil and natural gas resource is under development by a consortium operated by ExxonMobilXOM in which Hess is a partner along with Chinese oil company CNOOC.
The consortium’s operations are governed by a joint operating agreement (JOA) which contains standard language to such contracts that could allow existing partners to pre-empt sales of interests like Hess’s to third parties by exercising a right to match the offer. The Journal’s story is based on an S-4 filing with the SEC by Chevron notifying interested parties of the pre-emption clause, and that it is currently engaged in discussions with ExxonMobil and CNOOC on the matter. Chevron further discloses that a possibility exists that its deal may not be completed along its anticipated time frame should these discussions become dragged out.
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