Shares of Chevron Corporation (NYSE:CVX) and Hess Corporation (NYSE:HES) experienced significant declines following the announcement that an arbitration hearing related to their $53 billion merger with Exxon Mobil Corporation (NYSE:XOM) will be postponed until at least mid-2025.
The international arbitration panel, which is reviewing Exxon’s claim that Chevron’s acquisition does not entitle it to control Hess’s stake in a Guyanese oil project, has scheduled the hearing for May 2025. A decision is anticipated within the following three months, according to a joint statement from Chevron and Hess issued late Wednesday. Previously, the companies had anticipated a decision by the fourth quarter of 2024.
Hess shares fell by as much as 7% in New York trading, marking the largest intraday decline since March 2023. Chevron’s shares dropped by up to 3.6%, making them the worst performers in the S&P 500 Energy Index.
The gap between Hess’s trading price and Chevron’s all-stock offer widened to more than $15, the largest since the deal’s announcement, indicating growing market concerns about the merger’s outcome.
Chevron and Hess had hoped and requested an earlier hearing, but the arbitrators’ schedules did not permit it. This delay poses a substantial setback for the deal, which has been pending for over nine months. The merger is also under review by the U.S. Federal Trade Commission (FTC), which plans to defer its decision on whether to block the merger until after the arbitration case is resolved, according to sources familiar with the matter.
Chevron remains confident in its position. The company stated, “The views of Chevron and Hess on the merits remain unchanged. Exxon and Cnooc continue to ignore the plain language of the operating agreement, and Chevron and Hess remain confident.”
Chevron’s agreement to acquire Hess was announced in October and represents the company’s largest takeover in two decades. The deal’s centerpiece is Hess’s 30% stake in a major Guyanese oil field operated by Exxon, which is the largest oil discovery of the past decade. Exxon, which operates the block and holds a 45% stake, contends that the governing contract includes a right of first refusal over Hess’s stake. In contrast, Hess argues that this right does not apply because the deal is structured as a corporate merger rather than an asset sale.
Chevron has stated that it will abandon the entire acquisition if Hess’s stake is excluded from the transaction. Hess investors approved the takeover in May with just 51% support, after several large shareholders and Institutional Shareholder Services Inc. suggested delaying the vote until after the arbitration case. Concerns were raised that investors would not receive Chevron dividends until the deal was finalized, diminishing the transaction’s value.
Featured Image: Megapixl
Author Faith Yakubu 
