Exxon Mobil (XOM.N) and Hess (HES.N) are set to meet in court on Monday for a critical hearing that will determine the fate of Chevron’s (CVX.N) $53 billion acquisition of Hess. The deal, announced in October 2023, is one of the largest in the oil industry in recent years and is central to Chevron CEO Mike Wirth’s strategy to enhance the company’s performance. However, the acquisition is facing delays due to arbitration disputes filed by Exxon and China’s CNOOC, Hess’ partners in Guyana, which have complicated the deal’s closing and cost Chevron increased output and revenue.
The Heart of the Dispute: Guyana’s Stabroek Block
The primary asset in question is Hess’ 30% stake in the Stabroek Block, a prolific oilfield off the coast of Guyana, where Exxon is the operator. The field is one of the world’s fastest-growing oil producers, with an estimated 11 billion barrels of oil equivalent. Exxon and CNOOC claim they have a right of first refusal to purchase Hess’ stake, a claim Chevron and Hess dispute. They argue that the clause does not apply to the sale of the entire company. If Exxon and CNOOC win the arbitration, the acquisition could fall through.
Details of the Arbitration Hearing
The arbitration tribunal, under the International Chamber of Commerce (ICC), is set to hear the dispute in a confidential session in London starting Monday. The tribunal will review the testimony from Exxon, CNOOC, Hess, and Chevron, with the majority of written statements already submitted before the hearing. The process is expected to take several months, with the tribunal’s final decision anticipated in the third quarter of this year. According to ICC arbitration attorneys, this timeline is relatively fast given the size of the dispute.
The Court’s Proceedings and What to Expect
The arbitration hearing will begin with opening statements from each party, followed by cross-examination of witnesses and experts. The arbitrators will ask questions of the witnesses, and each party will have the chance to address key issues. The hearings are likely to span five days, and the arbitrators may ask for additional information in the closing statements. After closing, the tribunal will formally close the hearing and deliberate on a decision.
What’s Next: Waiting for a Decision
Following the hearing, the tribunal will deliver its draft decision to the ICC for review and approval. While the ICC rules stipulate that the decision should be rendered within six months, the timeline could be extended depending on the complexity of the case. Although parties may challenge the decision on limited grounds, such challenges are rarely successful, meaning the final award could be delivered to the parties after further review. As the waiting game continues, all eyes are on the tribunal’s final decision, which will shape the future of Chevron’s acquisition of Hess.
