Chevron’s $53 Billion Hess Acquisition Clears Major Hurdle with Expected FTC Approval

Chevron’s proposed $53 billion acquisition of oil rival Hess is poised to receive a significant boost with the U.S. Federal Trade Commission (FTC) expected to give its blessing as early as this week, according to sources familiar with the matter. This development removes a major hurdle for the mega-merger, leaving ExxonMobil’s legal challenge as the final obstacle.

News of the anticipated FTC approval sent Hess shares surging by as much as 3% in after-hours trading on Monday. Chevron’s stock, which had lagged behind the broader energy sector this year due to uncertainty surrounding the deal’s fate, is likely to get a boost from this development.

The FTC’s green light follows a lengthy review process that began last October when the deal was first announced. The regulatory scrutiny included a second information request sent to Chevron two months later.

While the FTC’s anticipated approval marks a major win for Chevron, ExxonMobil’s legal challenge poses a significant roadblock. ExxonMobil, along with its partner CNOOC Ltd, is contesting the deal, claiming a right of first refusal on any sale of Hess’s prized Guyana assets, which are central to the merger’s value proposition.

This dispute centers on the interpretation of a contract governing the Exxon-CNOOC-Hess partnership in Guyana, one of the world’s most prolific and profitable oil-producing regions. An arbitration panel is scheduled to deliberate on the matter in May 2025, with a decision expected later that year. Until this legal hurdle is cleared, the merger remains in limbo.

The Chevron-Hess deal, if finalized, would rank among the largest in the rapidly consolidating U.S. oil and gas industry. It follows on the heels of several other multi-billion dollar mergers, including Exxon’s acquisition of Pioneer Natural Resources and Occidental Petroleum’s purchase of CrownRock.

The FTC’s expected approval of the Chevron-Hess merger, while requiring ExxonMobil to divest certain assets, suggests that regulators are increasingly scrutinizing these mega-deals for potential anti-competitive impacts. The outcome of ExxonMobil’s legal challenge will have significant implications for the future landscape of the U.S. oil and gas industry.