Chevron (CVX) -) unveiled plans to buy energy major Hess Corporation (HES) -) in a $53 billion all-stock mega-deal that comes just weeks after rival Exxon's (XOM) -) $60 billion takeover of Pioneer Natural Resources.
Chevron said it will pay $171 per share for New York-based Hess, with investors getting 1.025 shares of Chevron for each of its Hess holdings. Based on Hess's Friday closing price, the deal values the group at around $53 billion.
The takeover puts Chevron in a market leading position in the shale oil regions of Guyana, where Hess has a 30% ownership in more than 11 billion barrels of oil equivalent discovered recoverable resource.
Chevron, which opted for an all-stock deal despite sitting on a cash pile of more than $10 billion, said it would boost its share buyback program by $2.5 billion, taking it to the top of its $20 billion range, once the deal is completed next year.
“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” said Chevron Chairman and CEO Mike Wirth. “Importantly, our two companies have similar values and cultures, with a focus on operating safely and with integrity, attracting and developing the best people, making positive contributions to our communities and delivering higher returns and lower carbon.”
Hess shares were marked 0.74% higher in early Monday trading to change hands at $164.37 each. Chevron shares, meanwhile, fell 2.4% to $162.89 each.
Earlier this month, Exxon offered to pay $253 of stock for each Pioneer share, valuing the Irving, Texas, group at around $59.5 billion, in what would be the largest since the $81 billion merger between Exxon and Mobil in 1998 and the largest deal of the year in U.S. markets.
The deal also secures the industry's largest stake in the Permian Basin, an oil-and-gas-rich expanse of land that runs through west Texas and New Mexico and is largely seen as a cheaper and more reliable area for drilling than other parts of the world.
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