Guyana’s President said that he welcomes Chevron to join the ExxonMobil consortium operating the $150 billion offshore oil project of the country. This is ahead of the crucial vote by Hess’s shareholders regarding Chevron’s controversial takeover offer.
Chevron made a $53 billion offer to purchase Hess in October. This was partly to get a foothold on Guyana’s Stabroek Block – one of the richest oil discoveries of recent decades. Hess holds 30% of the project.
Irfaan Ali said that his government is keen to attract world’s largest Oil companies such as Chevron to develop its resources. He suggested that any move made by Exxon in order to increase its stake could cause competition concerns.
Exxon, the US’s largest oil company, filed an arbitration case claiming it had the right of first refusal in purchasing Hess’s share of the Guyana project. This move could increase its own stake beyond its current 45 percent.
Ali replied, “I would not use the term nervous,” when asked if he was worried about Exxon’s possible acquisition of a larger stake in the project. He said that consolidation in the other sectors, where one company controls more than half the market can be a cause for concern. “We believe that the partnership is working well,” he added.
Ali said that the decision to add a new major partner to the consortium is a matter between the existing partners. However, he added that it would be great to have “the largest operators in the US operating in Guyana”.
Exxon says it will not make a counterbid on behalf of Hess. Chief executive Darren Woods said that if the pre-emption claim is proven, acquiring Hess’s 30 percent stake in Guyana would be one of the options.
The Guyanese President’s remarks come before a crucial vote on Tuesday by Hess shareholders to decide whether or not they accept the Chevron Offer. The vote will be close as an increasing number of investors voice concerns about the deal.
Institutional Shareholder Services (ISS), a leading proxy advisor, has told investors to abstain and called for a pause in the merger process until more information about the arbitration procedure is revealed. Glass Lewis, a prominent proxy advisor, has also called for a yes vote.
Three shareholders, HBK Capital Management (HBK), DE Shaw (DE Shaw) and Pentwater Capital Management have announced that they will not vote. These funds hold a total of approximately 6 percent of Hess’s stock. Vanguard, BlackRock, and State Street declined to reveal how they will vote.
Frederic Boucher is a risk arbitrage analyst with Susquehanna Financial Group. He said that the vote would be close.
If it’s not quite over the 50% threshold, but close. Hess may adjourn May 28 and introduce [a compensation payment] or similar to help get the vote over the finish line.
Ali was criticized in Guyana for not renegotiating the Stabroek Production-Sharing Agreement signed by the former government with Exxon Hess, and China’s Cnooc. Experts in oil contracts have called it a “unusually sweet” deal.
Ali claimed that the contract had been “skewed” in favor of Exxon, but the government decided to not seek renegotiation as “sanctity of the contract” was of paramount importance. He said that a legal dispute with Exxon, or any “huge” company for that matter, would have a negative impact on the entire oil industry.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.