company’s CEO commits to partnering with authorities to create shared prosperity, value for the nation and its people

IN a strategic move, Chevron Corporation, on Monday, agreed to buy outstanding shares of Hess Corporation in a landmark all-stock transaction valued at US$53 billion.
According to a statement from Chevron, the acquisition marks a significant upgrade and diversification of company’s portfolio and includes Hess’ holdings in the Stabroek Block in Guyana; this is considered as an asset of immense value characterised by industry-leading cash margins and low carbon intensity.
This acquisition is set to position Chevron for substantial production growth in the coming decade.

Hess’ Bakken assets add another leading U.S. shale position to Chevron’s Denver-Julesburg (DJ) and Permian basin operations and further strengthen domestic energy security.
The combined company is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance. In addition, John Hess is expected to join Chevron’s Board of Directors.

Chevron’s Chairman and Chief Executive Officer (CEO), Mike Wirth, during the announcement, on Monday, said that Chevron intends “to continue partnering with the Government of Guyana to create shared prosperity and value for the country and its people.”
He added: “This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets.”
Wirth underscored the alignment in values and cultures between the two companies, emphasising their shared focus on safety, integrity, community contributions, and financial performance.

Meanwhile, Chevron’s Chief Financial Officer, Pierre Breber, said that the addition of Hess is expected to further extend the company’s cash flow growth.
“With greater confidence in projected long-term cash generation, Chevron intends to return more cash to shareholders with higher dividend per share growth and higher share repurchases,” he said.

Hess said that the strategic combination brings together two strong companies to create a premier integrated energy company, which he is proud of.
“I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and deliver significant shareholder value for years to come,” Hess said.
But what does this mean for Guyana? According to Chevron, the acquisition offers a strong strategic fit for the company, granting the company 30 percent ownership in the Stabroek Block, which represents more than 11 billion barrels of oil equivalent.

This move promises high cash margins, robust production growth, and potential exploration opportunities. The transaction is also anticipated to boost Chevron’s cash flow per share in 2025, driven by synergies and the start-up of a fourth floating production storage and offloading (FPSO) vessel in Guyana.
As a result, Chevron’s estimated five-year production and free cash flow growth rates will experience a positive upswing.

Enhanced shareholder returns are also on the horizon, with Chevron set to recommend an eight percent increase in its first-quarter dividend per share, raising it to US$1.63 in January.
After the deal’s completion, Chevron will further bolster shareholder value by increasing share repurchases by US$2.5 billion, reaching the upper end of its guidance range.
In terms of capital efficiency, the combined company will operate with a capital expenditures budget of US$19 billion to US$22 billion and is expected to generate US$10 to US$15 billion in before-tax proceeds through 2028 by selling assets.