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Shareholders file lawsuits against Hess over US$53B deal with Chevron deal
Kaieteur News – Shareholders of U.S oil producer Hess Corporation have filed two lawsuits against the company contending inadequate disclosure of the proposed sale to Chevron – Reuters reported.
It was stated that Hess opened a new tab on Tuesday, saying it disputes claims in several shareholder letters and at least two lawsuits alleging inadequate disclosures over its proposed sale to Chevron, opens new tab. The claims, filed in federal court in New York and the Delaware Court of Chancery, seek to further delay or block the US$53 billion deal. Hess shareholders are scheduled to vote May 28, 2024 on the deal.
The allegations of deficient disclosures in the deal proxy “are without merit and (Hess) intends to defend against the matters and any subsequent demands or filed actions,” the company said in a securities filing on Tuesday. The U.S. Federal Trade Commission is reviewing the deal, which also has been challenged by ExxonMobil, which claims a right of first refusal to Hess’ prized Guyana assets.
According to reports, Exxon and China’s CNOOC have merged their arbitration claims against Chevron’s planned acquisition of Hess, which would give the U.S oil giant access to Guyana’s Stabroek Block.
Last October, it was announced Chevron will be acquiring Hess for US$53 billion. The takeover would give Chevron access to Hess’ most valuable asset in Guyana. The operator of the Stabroek Block is ExxonMobil Guyana, who holds a 45% interest, while Hess Guyana holds 30% interest and CNOOC Petroleum Guyana Limited with 25% interest.
Exxon was the first to move for arbitration, filing its case at the International Chamber of Commerce in Paris, arguing that it has a right of first refusal over Hess’ stake. CNOOC later followed suit to uphold its right to Hess stake in the block. 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, providing unlimited tax waivers, uncapped interest rates and perhaps the lowest royalty rates known to the industry, at a meager two percent. Production from the Stabroek Block developments sits above 600,000 barrels per day (bdp) – with Exxon having the Liza 1, Liza 2 and the Payara projects online. The oil companies have embarked on an aggressive drilling campaign in the Stabroek Block targeting three other developments: Yellowtail, Uaru and Whiptail projects. It should be noted that Yellowtail and Uaru have already been approved, while Whiptail is under review awaiting government approval any day now.
Moreover, according to a Reuters’ article, Chief Executive Officer (CEO) of Exxon, Darren Woods said 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.
“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 consortium governing the Stabroek Block.
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