Chevron to buy Hess Corp for $53 billion

on Oct 23, 2023
  • Chevron Corporation valued Hess Corp at $171 per share on Monday.
  • Citi analyst Alastair Syme commented on the announcement.
  • Hess opened in the green today but Chevron is down about 2.0%.

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Hess Corp (NYSE: HES) opened in the green today after Chevron Corporation (NYSE: CVX) said it will buy the energy company for $53 billion.

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Chevron values Hess Corp at $171 a share

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The all-stock agreement announced this morning values each share of Hess Corp at $171 – about a 5.0% premium on their previous close.

Chevron expects the acquisition to help it compete better against its larger rival Exxon in Guyana. Pierre Breber – its Chief Financial Officer said in a press release today:

The addition of Hess is expected to extend further Chevron’s free cash flow growth. Chevron intends to return more cash to shareholders with higher dividend and share repurchases.

Shares of Chevron Corp are down 2.0% at writing after announcing this transaction that will also help expand its footprint in U.S. shale.

Citi analyst reacts to the announcement

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Chevron is spending $53 billion on Hess Corp primarily to “high-grade” its portfolio, as per Citi analyst Alastair Syme.

The said agreement is expected to complete within the first six months of 2024 provided that it meets the customary closing conditions including regulatory and shareholders’ approval.

Chevron is convinced that coming together with Hess Corp will help cut $1.0 billion in annual costs. On Monday, it also revealed plans of generating up to $15 billion via asset sales through 2028.

The oil and gas behemoth is expected to earn $3.58 a share in its current quarter versus $5.56 per share a year ago. Its announcement arrives only days after Exxon Mobil confirmed plans of buying Pioneer Natural Resources for about $60 billion.

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