Arbitration closed. Hess wins
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Had it confirmed this weekend. Chevron / Hess closes by end of the week.
Loses nor looses
have they really won? can't see a decision and doesn't look like they closed the deal yet?
@wj Read the JOA, The 2002 AIEN JOA model contract on Change of Control was written after the big mergers in 1990s to address this exact situation. Please quote the exact legal language in the JOA you are referring to which would exempt this.
@t8 The point is other mergers go through no matter if they have JOA’s with right of first refusal clauses. Exxon still operates fields under XTO energy. Chevron still operates under union oil company of California. That’s all strategy so a change of control is not triggered. It’s oil and gas M&A 101. Exxon , Chevron & HESS are all well aware how this process works. Exxon is just dragging the smaller companies through the mud.
Like I said it’s an Exxon win no matter what the results are of the arbitration.
Good - DWW gets f’d. So much for compete to win; He lost and he lost us trust with a vital partner in multiple JVs that we rely on.
The arbitration between Chevron and Exxon centers on Chevron's $53 billion acquisition of Hess Corporation, particularly concerning Hess's stake in the lucrative Stabroek Block in Guyana.
Background of the Dispute
The arbitration arises from a legal conflict over Chevron's acquisition of Hess, which includes a 30% stake in the Stabroek Block, a significant oil-producing area in Guyana. Exxon, which operates the block with a 45% stake, along with its partner CNOOC, claims a right of first refusal (ROFR) based on their partnership agreement with Hess. They argue that this right should allow them to block the acquisition unless they are given the opportunity to purchase Hess's stake first.
Current Status of Arbitration
As of now, arbitrators have reached a decision regarding the dispute, but the specifics of that decision have not been publicly disclosed. The International Chamber of Commerce (ICC) in Paris is overseeing the arbitration, and the ruling will determine whether Chevron can proceed with its acquisition of Hess or if Exxon and CNOOC's claims will prevail.
Implications of the Decision
The outcome of this arbitration is critical for both companies. If the arbitrators rule in favor of Exxon, Chevron may have to abandon the acquisition, potentially paying a $1.7 billion breakup fee and seeking alternative strategies to replenish its oil reserves, which have been declining. Conversely, if Chevron wins, it could solidify its position in one of the world's most promising oil regions, which is projected to significantly increase production in the coming years.
Conclusion
The arbitration between Chevron and Exxon is a high-stakes legal battle that could reshape the competitive landscape in the oil industry, particularly in Guyana, which has become a focal point for major oil discoveries and production growth. The final decision from the arbitration panel is eagerly awaited by both companies and the broader market, as it will have significant financial and operational implications for their future strategies in the region.
@t6 you make contradicting statements in your post. What are you trying to say?
@sj There is technically no change of control. Hess will still exist as a subsidiary of Chevron. It’s how all “Mergers” are structured so a change of control is not triggered. Do you think that other companies XOM or CVX has absorbers over the years didn’t have JOA, with change on control clauses on their assets?
This was a very good delay tactic at best. XOM wins no matter what.
Not one of you has read article 12.3 of the JOA. It addresses Change in Control which is "any direct or indirect change in Control of a Party (whether through merger, sale of shares or other equity interests, or otherwise) through a single transaction or series of related transactions . . ." I am interested in how the arbitration addresses "any" and "merger"
Generally, when a property is sold as part of a larger portfolio of assets, the ROFR might not apply, especially if the ROFR property is not the primary focus of the transaction. If the ROFR agreement is unclear, it is usually held against the party that drafted the agreement, in this case Exxon. Therefore, best guess is Chevron wins the arbitration.
@c8 If Exxon had won, then the Hess-Chevron deal would have fallen through. Since the deal was made, Hess has become more valuable. Now it looks as Hess will be acquired by Chevron at the lower agreed upon acquisition price. Thus, the market reacted accordingly.
Exxon knew their case was a long shot, but they were playing g dirty pool to delay Chevron’s acquisition of Hess for over a year.
Chevron employee here. While it does appear that Chevron won the arbitration, it still is a win for Exxon. They were able to put the merger in a holding pattern for over a year and stifle other investments by a competitor. And the best part was that it was pretty much free.
@fk wasn’t Chevron’s argument that it’s a merger and not an acquisition?
Nice try XOM; place your hopes on a 3 person arbitration panel to mis-interpret precedent that the acquisition of the parent company should be treated as buying each individual interest that Hess owns in each country in which they conduct business w/ a partner.
I'm guessing that XOM was looking for a settlement offer from CVX or had to find a case to keep in-house legal staff occupied :)
Chevron wins
No what failed was DWs misunderstanding of the basis of oil and gas risk and reward. Imagine if we won. In this case all ROFRs would be based on the outcome of the risk taken and as such only known after a contract was signed. A pure Dik move without any basis. He should resign.
Hess won as it was a strict interpretation of the contract. It had nothing to do with our desired interpretation of the concept that risk and equity go hand in hand. Welcome to contract law 101.
@c6 Hess was down almost 1% in London trading today. Can you explain how it looks like they won?
Ya, sure looks like chevron won out...
@OP could you please tell us your source for this information?
IYKYK
That decision hasn't been made public and I doubt the arbitrators would have told YOU. The ICC is still reviewing the decision, so nothing is official yet.
Really?