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Exxon CEO says: “We only want the shares in Stabroek Block, not Hess Corp”
Chief Executive Officer (CEO) of ExxonMobil Corporation, Darren Woods
Kaieteur News – ExxonMobil Corporation (XOM) has no interest in purchasing Hess Corporation, but instead has its eyes on the real treasure chest, Guyana’s Stabroek Block.
Exxon said on Monday that it was not looking to purchase the company but to acquire its stake in the resource rich oil block.
ExxonMobil is the operator of the Stabroek Block with a 45% interest, while Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Petroleum Guyana Limited holds 25% interest.
According to a Reuters’ article, Chief Executive Officer (CEO) of XOM, Darren Woods said on Monday that his company is trying to secure preemption rights over Hess Corporation’s Guyana assets in its dispute with Chevron. He clarified that Exxon was not trying to buy over Hess Corporation.
In October last year, Chevron announced its agreement with Hess Corporation to acquire all of the company’s shares, through a US$53B transaction. In a statement, the company pointed to the importance of the resources discovered in Guyana’s Stabroek Block.
The oil company noted, “The Stabroek block in Guyana is an extraordinary asset with industry leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade.”
To this end, it signaled, “The combined company is expected to grow production and free cash flow faster and for longer than Chevron’s current five-year guidance.”
ExxonMobil has since filed for arbitration since the oil giant believes it has preemptive rights, which allow shareholders access to stock before it is offered to others.
In his first public remarks on the company’s pursuit of an arbitration case that could block Chevron’s $53 billion deal for Hess, Woods said Exxon would not have waited for Chevron to announce its Hess deal if it had wanted to buy Hess.
“We’re basically standing up for what we believe is a fundamental right,” Woods told Reuters. Exxon is trying to “secure and confirm the rights in that contract gives the existing partners.”
Exxon wants to “evaluate that value and do what is in the best interest of ExxonMobil shareholders, given the investments that we’ve made and all the work we’ve done to make that successful,” he added.
Hess and Chevron have said they disagree with Exxon’s interpretation of the Joint Operating Agreement (JOA) that governs the Exxon, Hess and CNOOC Ltd consortium responsible for all of Guyana’s oil production.
Chevron’s acquisition of Hess has been stalled by the U.S. Federal Trade Commission’s request for additional information on the merger. That request pushed back any closing to at least the middle of this year.
The fight over Guyana’s Stabroek Block resources finds its genesis in the lopsided oil deal signed by the APNU+AFC Coalition administration back in 2016. This deal extends favourable terms to the oil companies, extending unlimited tax waivers, uncapped interest rates and perhaps the lowest royalty rates known to the industry, at a meager two percent.
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