Chevron completes Hess acquisition

Chevron has completed its $53-billion acquisition of Hess, after prevailing against Exxon Mobil in a legal dispute over offshore assets in Guyana.

The ruling by the Paris-based International Chamber of Commerce is a notable victory for Chevron, which had sought to buy Hess to gain access to the prolific Guyana oil reserves, considered to be one of the world’s most valuable oil developments.

The deal had been tied up for nearly two years after Exxon and China National Offshore Oil Corp. had filed an arbitration case with the ICC, claiming a right of first refusal over Hess’ assets in the Stabroek Block offshore Guyana.

The dispute had created significant uncertainty over whether Chevron’s acquisition of Hess would close, weighing on Chevron’s stock performance. The transaction would have failed if Exxon had prevailed.

Hess has a 30% stake in the Stabroek Block, while Exxon leads the project with 45% and CNOOC maintains 25%.

Their project is considered one of the most promising in the world and is expected to single-handedly produce about 1% of the world’s oil within a few years, according to the International Energy Agency.

CNOOC said it was disappointed in the arbitration panel’s decision, and Exxon said it disagreed with it.

“We disagree with the ICC panel’s interpretation but respect the arbitration and dispute resolution process,” Exxon said in a statement. “We welcome Chevron to the venture and look forward to continued industry-leading performance and value creation in Guyana for all parties involved.”

As the combination moves ahead, Chevron CEO Mike Wirth told CNBC that he anticipates “some” headcount reductions. Chevron had already been reducing staff, after announcing in February plans to lay off 15% to 20% of its workforce in an effort to cut costs.