An oil-patch brawl over a $53 bn megadeal entwines the legacies of three CEOs
Days after striking a $53 billion purchase of Hess, Chevron Chief Executive Mike Wirth called his counterpart at Exxon Mobil to discuss their future partnership in a mega-oil project Chevron would inherit through the deal. Darren Woods told Wirth he looked forward to collaboration in Guyana, where Exxon and Hess own portions of a buried treasure of 11 billion barrels of oil and gas. Chevron and Exxon have a long-established partnership in projects around the world, one they could expand off the coast of the rainforest-covered South American country, Woods indicated in the October phone call.
Weeks later, Exxon called with a starkly different message for Chevron and Hess: not so fast. Exxon executives contended they and China’s CNOOC, a third partner in Guyana, have a contractual right to pre-emptively match Chevron’s offer for Hess’s stake in Guyana. Blindsided, Chevron and Hess disagreed.
Both sides dug in, and private talks failed. Amid monthslong discussions, Exxon stunned its rivals again by filing for arbitration and ending talks in March. The proceedings could sink Chevron’s largest-ever deal.
Hinging on the interpretation of several lines in a confidential contract, their dispute has burst like a thunderclap in Houston, the capital of the U.S. oil industry, which hasn’t seen titanic oil companies battle like this since a court fight with Pennzoil forced Texaco into bankruptcy in the 1980s. The clash between the two largest descendants of John D.
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