The deal will leave European rivals focusing on renewable energy further behind in fossil fuels.
The combined company will expand Chevron’s oil production in less risky regions by adding to its output in the Gulf of Mexico.
“This is great for energy security; It brings together two great American companies,” said Chevron’s chief executive officer Michael Wirth, who has bulked up the company’s shale oil and gas holdings by acquiring US rivals PDC Energy and Noble Energy. The deal gives Chevron a 30% stake in the Exxon and CNOOC Stabroek oil block in Guyana, which is expected to triple to more than 1.2 million bpd by 2027.
CEO John Hess said the government of Guyana and Exxon would welcome Chevron’s entry into the country’s oil fields.“We eventually talked about each other’s companies and the strategic fit,” Hess said. The deal follows Exxon’s rapid-fire deals since July for top US shale producers Pioneer and Denbury. Those US$64-billion combined transactions put Exxon atop US shale and cemented the firm’s nascent carbon storage business.
Chevron said it tends to ramp up its share repurchases to the top of its US$20 billion annual range, if oil prices remain high, and will increase its annual shareholder dividend by 8%.“Shareholders of both companies will benefit from the stronger free cash flow that will more than double over the next five years,” Wirth said.
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