Heavyweight match of the decade — clash of the oil titans ends in victory for underdog
It was the heavyweight battle of the decade, with the colossus of crude Chevron Corp (coming in at a $261 billion market cap) going toe-to-toe in the arbitration ring with king of the carbon, the head honcho of Houston, its eternal archrival Exxon Mobil (weighing in at a $481 billion market cap) in an earth-shattering fight between oil majors the likes of which has not been fought in decades.
The prize? A sprawling ocean of oil buried off the coast of Guyana, the rights to which had belonged to Hess before being acquired by Chevron, to the dismay of its enemies at Exxon.
And in a stunning upset, Chevron defeated Exxon last week.
The dispute centered on whether Exxon and China’s CNOOC had a right of first refusal on Hess’ 30% stake in the Stabroek Block, one of the world’s most valuable high-output oil fields.
Chevron has officially closed its $53 billion acquisition of Hess after winning a closely watched arbitration case over offshore drilling rights in Guyana.
On Friday, Chevron CEO Mike Wirth told CNBC that the International Chamber of Commerce sided with Chevron in the ruling, ending months of uncertainty that threatened to derail the oil giant’s deal.
Chevron and Exxon are indeed rivals and often compete, but it’s rare for a dispute like this to make it all the way to arbitration. The tight-knit oil business is one of the more powerful lobbies in Washington and, when it does end up in the legal system, tends to close rank, making this public spat fascinating to watch.
Chevron shares were down roughly 1% Friday, while Exxon was down over 3%.
With the decision, Chevron has secured a foothold in the booming Guyana Basin, while Exxon will retain its 45% stake and leadership of the project. The deal’s closure paves the way for more integration and will include job cuts. Chevron has already been trimming staff, but Wirth said he expects “some” additional headcount cuts tied to the acquisition.