Chevron Corporation (CVX) shares are surging on Monday, fueled by the anticipation of imminent approval for its $53 billion merger with Hess Corporation (HES). The Federal Trade Commission (FTC) is reportedly poised to give the green light to the deal as early as this week, paving the way for a successful closure.
The path to completion has not been entirely smooth. In May 2024, Hess shareholders voted to approve the merger, but regulatory hurdles and an arbitration claim by ExxonMobil Corporation (XOM) threatened to delay the process. ExxonMobil, along with its partner CNOOC Ltd, filed an arbitration claim asserting their right of first refusal to any sale of Hess’s stake in a Guyana oil-producing joint venture. This claim, however, is expected to be heard in May 2025, which could potentially delay the finalization of the deal.
Despite the arbitration, Chevron and Hess remain optimistic, expecting a decision on the FTC approval by August. In contrast, ExxonMobil anticipates a decision on the arbitration claim by September 2025. To ensure a smooth transition, the final members of a three-person arbitration panel were appointed in July to resolve the ExxonMobil dispute.
The merger was initially scheduled to close in the first half of 2024, but the recent developments suggest an accelerated timeline. This positive news has invigorated investors, as evidenced by the premarket surge in both CVX and HES shares.
Investors seeking exposure to Chevron can consider the E.A. Series Trust Strive U.S. Energy ETF (DRLL) and SPDR Select Sector Fund – Energy Select Sector (XLE).
