Energy giant Chevron Corporation’s (NYSE:CVX) bid to acquire Hess Corp. (NYSE:HES) faces uncertainty due to a potential challenge from Exxon (NYSE:XOM) and China National Offshore Oil Corporation (CNOOC). The bone of contention is Hess’s prized oil project in Guyana, which holds immense value and potential.
Potential Roadblock to Chevron’s Hess Acquisition
Hess Guyana Exploration Limited (HGEL), a wholly owned subsidiary of Hess, is involved in an operating agreement known as the Stabroek JOA with Exxon Mobil and CNOOC affiliates. This agreement governs the rights and responsibilities of the involved parties. In an SEC filing, Chevron cautioned investors about Exxon and CNOOC’s claims, asserting their right to pre-empt Chevron’s bid for a stake in the Guyana oil block.
Chevron is focused on optimizing its portfolio and redirecting capital to more promising regions, such as the Permian Basin and Guyana. Thus, the dispute could jeopardize Chevron’s deal with Hess.
The Road Ahead
Chevron and Hess are disputing the relevance of Exxon’s claim that it has a right to first refusal of any sale of the Stabroek block. Chevron is negotiating with the parties involved and maintains a positive outlook about the completion of the deal.
Nevertheless, if negotiations fail, Chevron and Hess could initiate arbitration through Hess’s Guyana subsidiary.
What is the Prediction for Chevron Stock?
Wall Street analysts are cautiously optimistic about Chevron’s prospects primarily due to the lower oil and gas price realization. CVX stock has 10 Buy and six Hold recommendations for a Moderate Buy consensus rating. Chevron stock fell about 1.2% in one year. Analysts’ average price target of $176.63 implies 14.36% upside potential from current levels.
