CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
Per the Wall Street Journal, XOM has filed for arbitration to retain what it believes is a right of first refusal (ROFR) over the 30% stake in oil and gas development in Guyana held by Hess Corporation (HES 145 ***). XOM is citing the ROFR in response to HES’s agreement to be acquired by rival Chevron Corp. (CVX 150 ***), which was announced in 2023. We believe the Court will have to determine whether the way in which the merger was structured, and the way in which the joint operating agreement (JOA) in the Guyana development between the key parties was written, entitle XOM to invoke the ROFR or not. Given that the terms of the JOA have not been publicly disclosed, we do not have an informed view on XOM’s likelihood of success in arbitration. However, should the arbitrators find in favor of XOM, we believe it would kill CVX’s interest in buying HES. XOM currently has a 45% stake in that project and is the lead operator, and volume growth from Guyana is likely to be robust through 2030, in our view.