ExxonMobil accepts ICC ruling in Guyana oil block dispute with Hess

SPRING, Texas - ExxonMobil (NYSE:XOM), a $481 billion energy giant currently trading below its InvestingPro Fair Value, announced Friday it will respect the International Chamber of Commerce (ICC) Tribunal’s ruling in its contractual dispute with Hess Corporation over interests in the Stabroek Block offshore Guyana, despite disagreeing with the panel’s interpretation.

The dispute centered around ExxonMobil’s attempt to exercise preemption rights related to Hess’s interests in the Stabroek Block, a major oil discovery off Guyana’s coast. While expressing disagreement with the ruling, ExxonMobil, which boasts a strong EBITDA of $64.87 billion and has maintained dividend payments for 55 consecutive years, indicated it would abide by the arbitration decision.

"We disagree with the ICC panel’s interpretation but respect the arbitration and dispute resolution process," ExxonMobil stated in a press release. The company explained it had pursued the preemption rights to "protect the value we created through our innovation and hard work" in developing the Guyana resource.

The ruling appears to clear the way for Chevron to acquire Hess’s interests in the Stabroek Block as part of a larger acquisition. ExxonMobil acknowledged this outcome in its statement, saying, "We welcome Chevron to the venture and look forward to continued industry-leading performance and value creation in Guyana for all parties involved."

ExxonMobil and CNOOC, another partner in the Stabroek Block, had maintained they were acting to ensure adherence to contract terms and avoid setting what they considered a negative precedent for the industry.

The Stabroek Block has emerged as one of the world’s most significant oil discoveries in recent years, with multiple successful developments already producing oil offshore Guyana. According to InvestingPro, ExxonMobil maintains a "GOOD" financial health score and operates with moderate debt levels, positioning it well for continued development of such major projects. Get access to 8 more exclusive ProTips and comprehensive analysis in the Pro Research Report.

In other recent news, ExxonMobil has been in the spotlight with several significant developments. The company is expected to report second-quarter earnings of approximately $1.55 per share, which would miss UBS’s estimate of $1.66 but slightly exceed the Street consensus of $1.53. Lower commodity prices are cited as the primary factor for the projected 12% decrease in earnings compared to the first quarter. Meanwhile, Wolfe Research has lowered its price target for ExxonMobil to $140, citing the company’s positioning for an inflection in organic free cash flow growth as major projects begin operations. Piper Sandler, on the other hand, has raised its price target to $134, based on updated oil price forecasts, despite lowering its second-quarter earnings estimate due to anticipated lower contributions from Energy Products.

Additionally, a consortium led by ExxonMobil has discovered a natural gas reservoir off the coast of Cyprus, marking the second gas discovery in Block 10 with QatarEnergy. The Federal Trade Commission has denied a petition from Scott Sheffield, former CEO of Pioneer Natural Resources, related to Exxon’s acquisition of Pioneer. The FTC’s final consent order prohibits Exxon from appointing Sheffield or any Pioneer employee to its board for five years. These recent developments highlight ExxonMobil’s ongoing strategic and operational activities in the energy sector.

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