Chevron anticipates a quarterly impact of up to $400 Million from the Hess Deal

Chevron, the U.S. energy giant, said it expected to suffer a loss of between $200 million and $400 million during the third quarter due to the Hess transaction.

Chevron completed its $55 billion purchase of Hess, after winning a landmark court battle with larger rival Exxon Mobil in order to gain access the largest oil find in decades.

Earnings adjusted for severance and other costs associated with the deal are expected to range between $50 million to $150 million.

The U.S. Energy Major also expects that the deal will add $1 billion to 1,25 billion dollars to its capital expenditure for the current quarter.

The newly acquired assets from Hess are expected to produce between 450,000 and 500,000 barrels equivalents per day during the third quarter. This includes downtime.

Chevron’s global production in the second quarter totalled 3.4 millions barrels of oil-equivalent per day.

The acquisition was part and parcel of the largest wave of consolidation that has occurred in the oil sector in more than 20 years. It was also a strategic response to

Exxon's own mega-deal

Permian oil and gas reserves are growing.

The deal was first announced in 2023. However, it went through a long dispute regarding Hess's 30 percent stake in Guyana’s Stabroek Block, its most valuable asset.

Chevron has also been forced to lay off as much as 20% of its workforce globally, faced an increase in safety concerns, and seen its operations in Venezuela caught up in geopolitical conflict. (Reporting and editing by Anil D’Silva in Bengaluru, Vallari Srivastava from Bengaluru)

(source: Reuters)