Chevron completes acquisition of Hess, creating integrated oil giant

HOUSTON - Chevron Corporation (NYSE:CVX), a prominent player in the Oil, Gas & Consumable Fuels industry with a market capitalization of $264 billion, completed its acquisition of Hess Corporation (NYSE:HES) after satisfying all closing conditions, including a favorable arbitration outcome regarding Hess’s offshore Guyana asset, the company announced Friday.

The transaction combines Chevron’s existing portfolio with Hess’s assets, including a 30% stake in Guyana’s Stabroek Block with over 11 billion barrels of oil equivalent in discovered recoverable resources, 463,000 net acres in the Bakken, Gulf of America assets producing 31,000 barrels of oil equivalent daily, and natural gas assets in Southeast Asia. According to InvestingPro analysis, Chevron maintains strong financial health with moderate debt levels and robust cash flows that can sufficiently cover interest payments.

"This merger of two great American companies brings together the best in the industry," said Chevron Chairman and CEO Mike Wirth. "The combination enhances and extends our growth profile well into the next decade."

The Federal Trade Commission on Thursday lifted an earlier restriction, clearing the way for former Hess CEO John Hess to join Chevron’s Board of Directors, subject to Board approval.

Under the merger agreement, Hess shareholders received 1.0250 Chevron shares for each Hess share. Chevron issued approximately 301 million shares of common stock to Hess stockholders in connection with the transaction.

Chevron expects the acquisition to be accretive to cash flow per share in 2025 after achieving synergies and starting up the fourth floating production storage and offloading vessel in Guyana. The company targets $1 billion in annual run-rate cost synergies by the end of 2025. With a current dividend yield of 4.52% and a 37-year track record of consecutive dividend increases, InvestingPro data shows Chevron’s commitment to shareholder returns. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

The combined company’s capital expenditures budget is expected to be between $19 and $22 billion, with Chevron targeting a double-digit Return on Capital Employed at mid-cycle prices.

Chevron will provide updated long-term financial and operational information at its Investor Day in New York City on November 12, according to the company’s press release statement. The company’s next earnings report is scheduled for August 1, with analysts maintaining positive profitability forecasts for the year.

In other recent news, Chevron is gearing up for its second-quarter 2025 earnings report, with UBS maintaining a Buy rating and a $177.00 price target on the company. UBS anticipates a dip in earnings due to lower oil prices but expects robust operational performance in key areas like the Permian Basin and Tengizchevroil (TCO). The pending acquisition of Hess Corporation is a significant focus, with UBS predicting the transaction will conclude in the third quarter of 2025. Additionally, Chevron is undergoing a major restructuring to cut costs by up to $3 billion by 2026, streamlining operations into centralized divisions across various regions. This restructuring includes the consolidation of offshore and shale assets and the establishment of service centers in Manila and Buenos Aires.

Meanwhile, Kazakhstan’s energy ministry has terminated plans for a gas processing plant at the Karachaganak field, where Chevron holds an 18% stake. The ministry is now seeking domestic partners for the project. In a related development, Kazakhstan’s Tengizchevroil (TCO), where Chevron owns a 50% stake, has exported its first oil shipment to Germany via Russia’s Druzhba pipeline. Chevron is also seeking bids for its 50% stake in the Singapore Refining Co. and other Asian assets, with Morgan Stanley appointed to manage the potential sales. This move includes exploring sales of terminal and fuel storage facilities in Australia and the Philippines.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.