FTC clears Chevron’s $53bn merger with Hess
As a condition of the approval, the Federal Trade Commission (FTC) has stipulated that Hess CEO John B Hess will not join Chevron’s board of directors.
Chevron has successfully cleared a key hurdle in its proposed $53bn all-stock merger with Hess, having received approval from the FTC after an antitrust review.
This marks a crucial step towards finalising the transaction that was first announced in October last year.
As a condition of the approval, the FTC has stipulated that Hess CEO John B Hess will not join Chevron’s board of directors.
This decision aims to alleviate antitrust concerns stemming from allegations that the Hess CEO communicated with OPEC officials and a Saudi Arabian official about oil market stability and inventory management.
The FTC’s complaint highlighted John B Hess’ interactions with OPEC and his encouragement for actions to stabilise production and manage oil inventories.
FTC Bureau of Competition director Henry Liu said: “John B Hess’ communications with competitors about global oil output and other dimensions of crude oil market competition disqualify him from serving on Chevron’s board of directors.” FTC Bureau of Competition director Henry Liu said: “John B Hess’ communications with competitors about global oil output and other dimensions of crude oil market competition disqualify him from serving on Chevron’s board of directors.”
Despite these concerns, John B Hess will still contribute to Chevron as an advisor on government relations and social investments in Guyana, as well as supporting the Salk Institute’s Harnessing Plants Initiative.
The merger’s completion is now contingent on other conditions including the resolution of arbitration proceedings related to pre-emptive rights in the Stabroek Block joint operating agreement in Guyana.
This joint venture, which comprises ExxonMobil with a 45% stake, CNOOC and Hess, controls a promising oil region with more than 11.6 billion barrels of recoverable oil and gas discoveries since 2015.
Chevron has expressed confidence that the arbitration will uphold its position.
Meanwhile, Hess shareholders gave their nod to the merger agreement in May 2024.
Chevron chairman and CEO Mike Wirth said: “This is an important step toward completing the merger, which will benefit our shareholders, the industry and the country of Guyana, and add world-class assets to our already advantaged portfolio.”
Published: 01-10-2024
