Guyana has emerged as one of the most prized oil assets over the last 10 years and the race to develop this asset is seen as critical to stable oil production growth over the next 10 years. Chevron has attempted to jump into this growth by purchasing Hess for a $53B price tag, seemingly giving them access to Hess's prized 30% stake in the Starbroek Block. This deal gave Chevron the future production growth it was seeking after missing out on some of the larger Permian shale deals we have seen over the last 12 months. But ExxonMobil had other plans, being the operator of this field, has experienced what it sees as a "First Of Right of Refusal" to Guyana and has petitioned to international courts to block this deal until ExxonMobil decides whether or not to "bid" on this 30% stake.

Episode 7 of the Deal Spotlight felt like the perfect place to discuss the details surrounding this potential merger, and I was lucky to be able to get Bennett Williams to join me for this discussion. Bennett has spent his entire career working in the M&A space and having worked within Chevron doing corporate offshore development, brings a unique insight into this merger mess. He spent the first half of the show helping educate me on the ins and outs of offshore development, dealing with governments, and understanding how these JOAs are structured. After laying the groundwork, we dive into the details of this proposed deal, look at some of the potential language that may have been used to craft the JOA and who he thinks ultimately will prevail in this suit.  

This was a great educational piece for me having spent my career in the Lower48, so big thanks to Bennett for taking the time to come and deal with me!

Until the next deal!

Links:

Bennett Williams: https://www.linkedin.com/in/bennett-g-williams/

GitHub Repo: https://github.com/Sandstone-Group/dealspotlight/tree/main/exxonchevronhess-ep7

ENB Articles:

https://energynewsbeat.co/exxons-60-billion-fight-with-chevron-will-reshape-big-oil/

https://energynewsbeat.co/exxonmobil-has-no-interest-in-hess-purchase-amidst-chevron-dispute-ceo-says/

https://energynewsbeat.co/exxonmobil-makes-fid-on-6th-project-in-contested-guyana-asset/

https://energynewsbeat.co/exxonmobil-chevron-to-increase-guyana-permian-oil-production-amidst-100-billion-ma-spending/

https://energynewsbeat.co/hess-investor-d-e-shaw-to-abstain-from-voting-on-53-billion-chevron-acquisition-amid-exxonmobil-arbitration/

Highlights of the Podcast

00:00 - Intro

01:51 - Bennett Williams Background

6:03 - Differences Between Onshore and Offshore M&A

12:04 - Government and Offshore Deals

19:35 - Production Sharing Contracts (PSC)

30:16 - Importance of Guyana

36:04 - Chevron-Hess Deal Overview

43:11 - Exxon's Right of First Refusal

52:25 - Arbitration and JOA Language

01:08:20 - Exxon's Game Theory

01:09:17 - Closing Thoughts