Hess-Chevron Merger Hits Snag

Lekha Gupta | June 21, 2024

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The merger of Hess Corporation (NYSE:HES) and Chevron Corporation (NYSE:CVX) is reportedly stalled as the contract arbitration panel remains incomplete three months after the case was filed.

This delay is stalling the decision on whether Exxon Mobil has a right of first refusal over Hess’ Guyana operations, reported Reuters.

According to the report, the third and final arbitrator has not yet been appointed, and this delay could mean that no decision will be made this year, contrary to Hess’ forecast.

Each side appoints one arbitrator, who then nominates the third. The International Chamber of Commerce, overseeing the panel, has not commented on the timeline for appointing the third arbitrator or deciding the case.

“The arbitration is moving forward and we expect to have a decision by the end of 2024,” Hess said, according to Reuters. However, lawyers experienced in international arbitrations say the timing for such decisions can vary.

“The market is hoping that there is a speedy settlement to the arbitration process, but has never understood properly what Exxon is trying to achieve,” Mark Kelly, an analyst with financial firm MKP Advisors told Reuters “It is widely believed that Exxon has never communicated this to even Chevron or Hess.”

Last month, the majority of Hess’ 308 million shares outstanding voted in favor of the deal, clearing one hurdle toward the merger. The vote in favor of the merger ends claims by some shareholders who wanted additional compensation.

Investors can gain exposure to CVX via SPDR Select Sector Fund – Energy Select Sector (ARCA: XLE) and IShares U.S. Energy ETF (ARCA: IYE).

Price Action: CVX shares are up 0.05% at $156.73 and, HES shares were down 0.11% at $146.98 at last check Friday.

Related: Chevron Ends 55-Year North Sea Operations Ahead Of Hess Deal: Report

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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