Chevron's $53 Billion Acquisition of Hess

Company Details

Acquirer

Chevron Corporation (“Chevron”) is a publicly traded, vertically integrated energy company headquartered in Houston, Texas, with oil and gas operations worldwide. Founded in 1879 through its predecessor Pacific Coast Oil Company, it is today one of the world’s largest descendants of Standard Oil and a leading integrated energy group.

Listed on the New York Stock Exchange (NYSE: CVX), with a market capitalization of roughly USD 310 billion as of late 2025, Chevron produces crude oil and natural gas, manufactures fuels and petrochemicals, and invests in lower-carbon technologies. Under the leadership of its chairman and chief executive officer (“CEO”), Michael K. Wirth, Chevron operates a diversified global portfolio with leading positions in the Permian Basin, Gulf of Mexico, DJ Basin, Kazakhstan, the Eastern Mediterranean and Australia. With this diversified upstream and downstream footprint, Chevron operates at a scale where even incremental shifts in governance or strategy can influence investment and output decisions across crude markets.

Target

Hess Corporation (“Hess”) is a New York based independent exploration and production company listed on the New York Stock Exchange (NYSE: HES), historically active in North America, South America and Southeast Asia. Founded in 1933 by Leon Hess, the company entered the transaction with an implied market capitalization of approximately USD 50 billion. Under the leadership of long-time CEO John B. Hess, Hess has evolved from a more integrated oil business into a focused Exploration and Production (“E&P”) company with a high-growth upstream portfolio centered in Guyana and the Bakken shale.

Hess’s flagship asset is its 30% stake in the Stabroek Block, operated by Exxon Mobil Corporation (“Exxon”) (45%) with China National Offshore Oil Corporation (“CNOOC”) (25%) as the third partner, a deepwater basin described as one of the largest and most prolific oil discoveries in decades, with more than 11 billion barrels of recoverable oil equivalent. As a result, Hess’s value is increasingly concentrated in a single, Joint Venture (“JV”) governed growth province.

The Merger

Transaction structure and consideration

On 22 October 2023, Chevron and Hess (the “Parties”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which a newly formed Chevron subsidiary will merge with and into Hess under Delaware law, with Hess surviving as a direct, wholly owned Chevron subsidiary. As consideration, Hess shareholders are to receive Chevron voting securities with an aggregate value of approximately USD 53 billion at signing and, upon completion, will hold in the aggregate around 15% of Chevron’s outstanding shares. Under the final terms disclosed at closing, each Hess share is exchangeable for 1.025 Chevron shares, with Chevron issuing approximately 301 million shares from treasury and cancelling 15.38 million Hess shares previously acquired on the open market. The strategic center of gravity in the transaction is Hess’s 30% interest in the Stabroek Block offshore Guyana.

Strategic motives of the parties

For Chevron, the transaction is positioned as adding world class assets, including Guyana and U.S. Bakken, to an already diversified global portfolio, while driving significant free-cash-flow and production growth into the 2030s and targeting USD 1 billion in annual run-rate cost synergies by the end of 2025.

For Hess, the deal monetizes what CEO John B. Hess has described as “one of the industry’s best growth portfolios including Guyana, the world’s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer”, while allowing its shareholders to roll into a liquid, larger-scale vehicle and securing a board seat for Mr. Hess at Chevron.

Timeline and key milestones

From announcement to closing, the transaction followed a relatively simple corporate path but a complex regulatory and contractual one. The Parties signed the Merger Agreement on 22 October 2023. But on, 30 September 2024, the Federal Trade Commission (“FTC”) issued its complaint and proposed Decision and Order addressing John B. Hess’s prospective appointment to the Chevron board. A final Decision and Order was entered on 17 January 2025, formalizing the restriction. On 27 March 2025, Chevron and Hess petitioned the Commission to reopen and set aside that order. The petition was published in the Federal Register on 17 April 2025, with a public comment period running to 12 May 2025. Finally, on 17 July 2025, the Commission granted the petition, reopened the matter, and vacated the order in its entirety.

In parallel, following the October 2023 announcement, Exxon and CNOOC, Hess’s partners in the Stabroek Block, initiated arbitration under the Stabroek Joint Operating Agreement on March 6, 2024, asserting pre-emptive rights over Hess’s 30% interest. The International Chamber of Commerce (“ICC”) issued its award in July 2025, rejecting those claims. Chevron closed the acquisition on 18 July 2025, the day after the FTCs vacatur and following the arbitral ruling.

Legal Contentions

This operation turned to two distinct legal challenges that shaped its timeline and outcome. 

On the private-law side, the key constraint came from Exxon and CNOOC, which invoked the dispute-resolution mechanism under the Stabroek Joint Operating Agreement and commenced ICC arbitration, arguing that Chevron’s acquisition of Hess triggered change-of-control and right-of-first-refusal provisions over Hess’s 30% Stabroek interest. On July 18, 2025, the ICC rejected those claims, asserting that those rights did not apply to a parent-level merger set a significant precedent for future energy transactions.

On the public-law side, the Federal Trade Commission’s (“FTC”) intervention, culminating in a consent order barring John B. Hess from Chevron’s board and its later reversal, tested the legal limits of antitrust remedies and their reach into corporate governance.

This article analyses this merger to explore three interlocking themes: the limits of innovative antitrust behavioral remedies that intrude into board composition, the reach of Joint Operating Agreement (“JOA”) based pre-emption rights in parent-level M&A, and the broader implications for drafting, regulatory strategy and deal risk allocation in future energy mergers.

FTC proceedings: antitrust theory and governance remedies

Governance covenant and theory of harm

At the center of the FTC intervention was a governance covenant embedded in the Merger Agreement as Section 1.3(a) required Chevron to expand its board and appoint John B. Hess at closing.

The FTC reviewed the Chevron-Hess merger under Section 7 of the Clayton Act (15 U.S.C. § 18), which prohibits acquisitions whose effect “may be substantially to lessen competition, or to tend to create a monopoly”, and Section 5 of the FTC Act (15 U.S.C. § 45), which outlaws “unfair methods of competition” and authorizes the Commission to issue and later reopen remedial orders. In its Chevron-Hess complaint, the FTC defined the relevant market as the global market for the development, production and sale of crude oil, but pursued a coordinated-effects rather than a structural or unilateral theory.

The complaint alleged that John B. Hess had communicated “supportive messaging to OPEC” officials, including Secretaries General of the Organization of the Petroleum Exporting Countries (“OPEC”) and an official from Saudi Arabia. It further alleged that, if Mr. Hess took a seat on Chevron’s board after the merger, his participation would amplify those messages and “meaningfully increas[e] the likelihood that Chevron would align its production with OPEC’s output decisions to maintain higher prices”, thereby increasing the risk of industry coordination in violation of Section 7. Crucially, the Commission’s later order notes that the complaint did not allege that the merger would significantly increase market concentration, eliminate substantial head-to-head competition between Chevron and Hess, or create any vertical foreclosure risk. Nor did it allege an independent standalone violation of Section 5. Indeed, Section 5 was invoked only as facilitating the same theory of harm.

To settle those allegations, Chevron and Hess agreed to a consent order that (i) prohibited Chevron from nominating, designating or appointing John Hess to its board; and (ii) barred Chevron from retaining him in any advisory or consulting capacity, subject only to narrow carve-outs for interactions with Guyanese government officials and work on the Salk Institute’s Harnessing Plants Initiative, a research program aimed at enhancing plants’ natural ability to capture and store atmospheric carbon in their root systems. The order directly conflicted with Section 1.3(a) of the Merger Agreement, a covenant the petition later characterizes as “a fundamental part of the overall merger transaction” and central to Hess shareholders’ expectations. The final order was approved in mid-January 2025 by a narrow 3-2 vote of the outgoing FTC. It concluded the FTC’s initial review phase and entered into effect immediately before the Commission’s leadership transition, reflecting a divided view within the agency on the adequacy of the complaint and the appropriate use of merger-review authority in governance-related remedies.

Petition to reopen, dissents, ad rule-of-law concerns

On 27 March 2025, Chevron and Hess petitioned to reopen and set aside the order, arguing that the complaint “failed to state a cognizable theory of competitive harm under Section 7 or Section of the Federal Trade Commission Act, 15 U.S.C. 45”. Noting that the parties’ combined share in the global oil market was “in the low single digits” and below any structural presumption threshold in the 2023 Merger Guidelines.

The petition further argued that maintaining the order would undermine the rule of law and the Commission’s credibility. In support, it invoked the September 30, 2024, dissenting statements in the Chevron/Hess matter by then-Commissioner Andrew N. Ferguson and Commissioner Melissa Holyoak. In his dissent, Ferguson argued that the Chevron/Hess consent was obtained only because “the Commission leveraged its Hart-Scott-Rodino Act authority by threatening to hold up Chevron and Hess’s $53 billion dollar merger even though the lack of a plausible Section 7 theory had long been obvious”. He characterized the resulting settlement as “a sort of tax on merger” and that “reducing antitrust enforcement to a pay-for-peace racket inflicts serious injury on the rule of law and on the Commission’s credibility.” Holyoak likewise dissented on the ground that, in her view, the majority had “used its leverage in the HSR process to extract a consent from merging parties with no reason to believe the law has been violated.” Also, that the complaint advanced no “legitimate and factually supported theory of harm” under Section 7. Relying on these dissents, the petition contended that conditioning clearance of the Chevron/Hess transaction on the withdrawal of Mr. Hess’s board nomination reflected a use of Hart-Scott-Rodino gatekeeping powers to obtain a governance concession not tied to any substantiated antitrust violation.

Leadership pivot: opportunities for governance-based remedies

This shift can be understood against the broader arc of FTC leadership. Under former Chair Lina M. Khan, the Commission pursued an expansive approach to governance-based antitrust remedies in oil markets. Her Statement in the matter of Chevron Corporation and Hess Corporation describes OPEC as a “cartel that … enjoys outsized control over oil prices in the United States” and asserts that “when U.S. oil executives communicate … with high-level OPEC representatives … it threatens to replace the churn and dynamism of a competitive market with the ossification of a cartel.” It further explains that the proposed Chevron-Hess order builds on the Commission’s action in Exxon-Pioneer. In that matter, the FTC approved Exxon Mobil Corporation’s $64.5 billion acquisition of Pioneer Natural Resources subject to a consent order that barred Pioneer’s founder and former CEO Scott Sheffield from taking a seat on Exxon’s board or serving in any advisory capacity to Exxon’s board or management, based on allegations that he had sought to coordinate crude oil output with members of OPEC and OPEC+ through public and private communications.

Under Chairman Andrew N. Ferguson, the Commission later revisited the matter but did not repudiate governance-based remedies entirely. It ultimately reopened and set aside the consent, after concluding in each case that the complaint (i) failed to plead any antitrust law violation under Section 7 of the Clayton Act; (ii) contained no allegations that the acquisition itself would be anticompetitive; (iii) did not allege that the merger would materially increase market concentration or coordination risk; and (iv) disregarded the 2023 Merger Guidelines and decades of precedent. This sequence illustrates how a change in Commission leadership can produce a doctrinal pivot, from the Khan-era’s willingness to use Sections 7 and 5 to police cartel-adjacent governance patterns, to a later insistence on traditional market-structure and effect-based allegations tied to the transaction itself. 

Pleading standards and enforcement risk for future mergers

From a doctrinal standpoint, the vacatur order effectively sketches what a robust coordination-risk complaint must allege: (i) a defined relevant market; (ii) allegations that the merger materially increases concentration or removes a disruptive competitor; and (iii) facts showing why post-merger conditions would be more conducive to coordination. Here, the Commission noted that the complaint included no combined-share allegation, no evidence of substantial head-to-head rivalry, and no explanation of how the merger, as distinct from Mr. Hess’s pre-existing communications, would change the likelihood or stability of coordination. The theory rested on “supportive messaging” to OPEC and supposed amplification via a board seat, which the Commission deemed insufficient to show that the acquisition “may substantially lessen competition.”

The same formulation appears in the Exxon-Pioneer decision, where the Commission likewise found that the complaint did not plead any Section 7 violation, did not allege that Exxon’s acquisition of Pioneer would be anticompetitive, and did not claim that the transaction would materially increase concentration or facilitate coordination among oil producers, again faulting the complaint for departing from the analytical approach reflected in the 2023 Merger Guidelines. Taken together, the two vacatur decisions provide unusually clear guidance on what a modern coordinated-effects theory must look like in commodity industries: it must be grounded in an identified relevant market, in changes in concentration or competitive dynamics traceable to the merger, and in evidence that post-merger conditions would make coordination more likely or more stable, consistent with the frameworks described in the 2023 Merger Guidelines.

JOA arbitration: change-of-control and right-of-first-refusal provisions

JOA framework and pre-emption mechanics

On the private-law side, the deal was held in suspense by an  ICC arbitration over the Stabroek JOA, as Exxon and CNOOC asserted that the merger triggered change-of-control and right-of-first-refusal provisions over Hess’s Stabroek interest. The Stabroek Block offshore Guyana is governed by a JOA between Esso Exploration and Production Guyana Limited (an Exxon affiliate) as operator (45%), Hess Guyana Exploration Ltd (30%), and a CNOOC affiliate (25%). The JOA is believed to be based on the Association of International Energy Negotiators (formerly AIPN) model international joint operating agreement, with typical pre-emption and change-of-control mechanics.

Chevron’s securities filings, indicate that the Stabroek JOA contains a Right Of First Refusal (“ROFR”) clause which, if applicable to a change-of-control transaction and properly exercised, gives the other Stabroek parties a right to acquire the affected participating interest at a price derived from the value allocated to that interest in the change-of-control deal (grossed up for tax) and exercisable only after, and conditional on, closing of the parent-level transaction.

Arbitration claims and award

Following the October 2023 Chevron-Hess merger announcement, Exxon and CNOOC commenced arbitration in March 2024, under the ICC Arbitration Rules. They contended that the merger triggered the JOA’s change-of-control provisions and thereby activated their ROFR over Hess’s 30% Stabroek interest. Chevron and Hess argued that the ROFR, properly construed, did not apply to a parent-level share acquisition where Chevron acquired all of Hess, rather than a transfer of Hess’s Stabroek interest as a discrete asset. From Exxon’s perspective, pursuing arbitration had both transactional and systemic dimensions. Reuters reports that Exxon viewed itself as having created “significant value … in the development of the Guyana resource” and believed it had a “clear duty to [its] investors to consider [its] preemption rights to protect the value [it] created,” framing the case as one about enforcing contractual pre-emption rights rather than opposition to Chevron as such.

The ICC ultimately sided with Hess. The tribunal held that the Stabroek ROFR did not apply to the Chevron-Hess merger as structured, placing particular weight on the fact that Chevron had bid for all of Hess and not just its stake in the joint venture. That conclusion meant that no pre-emptive purchase right arose in favor of Exxon or CNOOC, removing the final obstacle to closing and allowing Chevron to complete the acquisition of Hess immediately after the award. Exxon and CNOOC publicly expressed disagreement with the tribunal’s interpretation but acknowledged the binding character of the arbitral process, with Exxon emphasizing that it would review the decision to inform future contract drafting.

Industry-wide implications and opportunities for Joint-Venture led M&A

The arbitration outcome was closely watched by industry participants and practitioners precisely because a restrictive reading of ROFR and change-of-control provisions in this context would influence the bargaining power of incumbent operators in future joint ventures. Chevron’s CEO Mike Wirth later remarked that the dispute had “hung over the industry” while it was pending and that resolving it by “affirming the industry practice that asset-level rights of first refusal don’t apply in a corporate-level M&A transaction” was “very important for our industry,” underlining the systemic significance attributed to the award.

Drafting risk: ROFR, change-of-control and deemed transfer language

For drafting and practice, the ICC’s reasoning reinforces a distinction that has long generated debate in joint operating agreement practice: whether ROFR and change-of-control clauses are limited to direct asset transfers, or whether they also capture indirect transfers via parent-company mergers or share deals. Some practitioners argued that, although the specific wording of the Stabroek JOA remains confidential, the case underscores the importance of precise deemed transfer and indirect change-of-control language if parties intend ROFRs to bite on parent-level M&A. In this sense, deemed transfer provisions treat specified events, such as a change in control of a party or a transfer of equity in a holding company whose principal asset is the joint-venture interest, as if the underlying participating interest itself had been transferred, thereby triggering any associated pre-emption or ROFR mechanisms.

Model JOAs based on the Association of International Energy Negotiators templates may require revision to address evolving deal structures, including explicit treatment of indirect transfers, upstream changes of control, and transactions in which a participating interest is embedded in a larger corporate acquisition. The Stabroek arbitration thus functions as both a case-specific resolution and a signal to joint-venture participants and counsel that boilerplate change-of-control drafting may be inadequate where assets as strategic as Stabroek are held through complex corporate structures.

Conclusion

The Chevron-Hess saga is less about a single transaction than about the pressure points of contemporary energy governance. On one side, competition authorities experimented with using merger control to shape who may sit in the boardroom of a global oil major and then had to recalibrate when that experiment could not be reconciled with established standards of market definition, concentration and effects. On the other, joint-venture partners sought to use contractual pre-emption tools to influence the ultimate owner of a strategic basin, only to find that clauses drafted for asset trades did not necessarily dictate the outcome of a parent-level acquisition.

Together, these episodes highlight how easily public and private instruments can be stretched beyond what they were built to do, merging law into a vehicle for general governance engineering, and JOAs into de facto veto rights over corporate control. The lesson is not that either path is illegitimate, but that both require greater discipline. Agencies that wish to police cartel-adjacent governance patterns must articulate theories of harm that are recognizably rooted in competition law rather than in diffuse concerns about influence, while industry participants that want pre-emption or change-of-control rights to bite on upstream M&A must say so expressly and live with the transactional and valuation consequences.

For future energy deals, the Chevron-Hess episode therefore functions as a cautionary map rather than a template: it shows where legal creativity can overrun its doctrinal foundations, where boilerplate drafting ceases to be neutral, and where the allocation of control over assets that matter for global supply will in practice be negotiated, at the intersection of antitrust enforcement, arbitral interpretation and the private ordering of exit rights.

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