Chevron to buy Hess for $84b in second oil mega-merger in weeks

Chevron said on Monday it agreed to buy Hess for $US53 billion ($84 billion) in stock, the second proposed megamerger among the biggest US oil players after ExxonMobil bid $US60 billion for Pioneer Natural Resources earlier this month.

The proposed deal raises the competition between Chevron, the No. 2 US oil and gas producer behind Exxon, and it will make it an unusual partner with its bigger rival in Guyana, as Hess, along with China’s CNOOC, were working together to develop drilling in the country.

The deal also signals Chevron’s plans to further boost investments in fossil fuels as oil demand remains strong and big producers use acquisitions to replenish their inventory after years of under-investment.

Chevron has offered 1.025 of its shares for each Hess share held, or $US171 per share, implying a premium of about 4.9 per cent to the stock’s last close. The total deal value is $US60 billion, including debt.

Chevron’s shares were trading 3 per cent lower premarket. RBC analysts said they were surprised by the deal timing and had expected the company to bide its time after Exxon’s mega deal for Pioneer.

Guyana has become a major oil producer following huge discoveries recently, turning it into a prominent producers, only surpassed by Brazil and Mexico in Latin America.