July 18 (Reuters)
After a turbulent few years, the oil and gas sector is back in the global spotlight, thanks to one of the largest acquisitions in the industry’s history. Chevron has just acquired Hess for US$53 billion. This acquisition boosts the company’s oil drilling footprint in one of the world’s most promising locations. What can we expect from the sector? Learn more.
The search for prominence in the global oil sector
U.S. oil and gas major Chevron CVX.N completed its $53 billion acquisition of Hess HES.N on Friday, after it prevailed in a landmark legal battle against larger rival Exxon Mobil XOM.N to gain access to the biggest oil discovery in decades.
Chevron’s acquisition of Hess will secure the company a 30% stake in Guyana’s prolific Stabroek Block, making it one of the biggest deals in the oil and gas industry.
Mergers and acquisitions in the shale industry have drawn increased antitrust scrutiny, with the U.S. Federal Trade Commission reviewing several multi-billion dollar deals, including Chevron, Exxon Mobil XOM.N, Diamondback Energy FANG.O, Occidental Petroleum OXY.N, and Expand Energy EXE.O, formerly known as Chesapeake Energy.
The biggest oil mergers
With growing global pressure for sustainability in energy companies, in addition to all the fluctuations in oil prices in recent years, companies like Chevron and Exxon remain competitive.
Here are the major deals in the global oil and gas sector since the 2000s:
- 2001: Chevron buys Texaco in a $39.5 billion deal and emerges as one of the largest energy firms in the world.
- 2002: Shareholders of Conoco and Phillips Petroleum, and the Federal Trade Commission approve an $18 billion merger between the companies and create the third-largest U.S. oil firm, ConocoPhillips COP.N.
- 2005: Chevron agrees to buy California rival Unocal for about $16.4 billion after fighting off Italian oil group Eni.MI, China’s CNOOC, and other rumored suitors.
- 2006: ConocoPhillips acquires Burlington Resources in a $35.6 billion deal and gains access to lucrative positions in North American gas-rich basins.
- 2007: Norway’s Statoil buys the oil and gas assets of Norsk Hydro for $30 billion to create a new energy firm, Equinor EQNR.OL.
- 2010: Exxon Mobil acquires XTO Energy for about $30 billion in stock to bolster its position as a leading U.S. natural gas producer.
- 2012: Russia’s state oil company RosneftROSN.MM buys TNK-BP from UK-based BP BP.L in a $55 billion deal.
- 2023: Magellan Midstream Partners’ unitholders vote in favor of its sale to larger rival ONEOK OKE.N for $18.8 billion, creating one of the largest U.S. energy pipeline companies. Exxon Mobil agrees to buy Pioneer Natural Resources PXD.N in an all-stock deal valued at $59.5 billion that would make it the biggest producer in the largest U.S. oilfield and secure a decade of low-cost production. Chevron agrees to buy smaller rival Hess Corp in a $53 billion all-stock deal, putting the company head-to-head against rival Exxon Mobil in two of the world’s fastest-growing oil basins – shale and Guyana. Occidental Petroleum OXY.Nagrees to buy privately held CrownRock in a cash-and-stock deal valued at $12 billion, its biggest since the debt-laden acquisition of Anadarko Petroleum in 2019.
This entire history of major mergers in the oil and gas sector shows how much the return of these mega-mergers impacts other competitions and prices. We can expect cycles of concentration and some peculiarities, as is the case today.
Regulatory alert raised after multimillion-dollar merger in the energy sector
Chevron has an even brighter future in the oil and gas sector with the acquisition of Hess, which aims not only to challenge Exxon’s dominance, but also to open the debate on corporate power within the energy sector when it comes to oil exploration and major mergers. We can expect the sector to strive to balance innovation and competitiveness as best it can during an energy transition.
GCN.com/Reuters