(Bloomberg) — Exxon Mobil Corp. and Cnooc Ltd. are considering exercising rights to amass Hess Corp.’s stake in a big offshore oil development in Guyana, potentially obstructing Chevron Corp.’s $53 billion deal to buy into the sphere.
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Exxon and Beijing-based Cnooc already own stakes in Guyana’s Stabroek block and have the fitting of first refusal over any change of ownership. Chevron warned that if the companies resolve to exercise those rights, its deal to buy Hess may collapse. Hess shares slid 2.6% to $146 at 5:29 p.m. in late Latest York trading.
“We owe it to our investors and partners to contemplate our pre-emption rights in place under our Joint Operating Agreement to be certain that we preserve our right to understand the various value we’ve created and are entitled to throughout the Guyana asset,” Exxon said in an announcement Monday.
Exxon, the operator of the project, first found oil in Guyanese waters in 2015 and has since discovered 11 billion barrels of reserves. The company expects production there to double to 1.2 million barrels a day by 2027, making it the world’s fastest-growing major oil discovery thus far decade. The project’s success made Hess’s 30% stake within the sphere its key asset, which lured Chevron to strike a deal to buy all the corporate in October.
Read More: Guyana Is Attempting to Keep Its Oil Blessing From Becoming a Curse
But Chevron warned in a regulatory filing Monday that the deal may fail to be completed if Exxon and Cnooc launch a successful counterbid.
“If these discussions don’t result in an appropriate resolution, and arbitration (if pursued) doesn’t result in a confirmation that such right of first refusal provision is inapplicable to the merger, then there might be a failure of a closing condition under the Merger Agreement, by which case the merger wouldn’t close,” Chevron said.
(Updates with Chevron filing starting in second paragraph.)
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