Chevron is acquiring oil driller Hess in a $53 billion (R1 trillion) all-stock deal announced on Monday.
It’s the second major industry merger this month – last week, ExxonMobil announced it would acquire shale driller Pioneer Natural Resources for $60bn. The deals signal that energy companies are betting on fossil fuels for the long haul even as policymakers are pressing the transition to cleaner energy options in the face of climate change.
The consolidation also comes as the major energy players are flush with cash after the run-up in crude prices in the aftermath of the Russian invasion of Ukraine in February 2022.
Oil prices have been on a wild ride ever since. They spiked more than 40% after the unprovoked attack, then moderated toward the end of 2022. But they have been trending upward more recently, spurred first by Saudi Arabian supply cutbacks and then by fears of a broader Middle East war amid the violence in Israel.
West Texas Intermediate crude, the US benchmark, stood at around $87 per barrel as of Monday morning, up 11% over the past six months. Brent crude stood close to $91 per barrel.
“I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and delßiver significant shareholder value for years to come,” John Hess, the CEO of the acquired company, said in a statement.