Chevron Targets Billions in Free Cash Flow Growth Amid Hess Acquisition Prospects
Chevron Corporation is on track to increase its free cash flow by $6 billion to $8 billion by 2026, with plans to cut expenses by “a couple of billion dollars,” according to the company’s Chief Executive Officer, Michael Wirth.
The oil giant aims to bridge the gap between itself and Exxon Mobil Corporation through a $53 billion acquisition of Hess Corporation, a move anticipated to reshape the industry landscape.
Hess Corporation’s CEO, John Hess, expressed confidence in the deal’s completion, stating at the Goldman Sachs Global Energy, Clean Technologies & Utilities Conference, “We’re very confident that the merger is going to go through, and we’re getting prepared for that.”
The acquisition’s progress is partially tied to an ongoing arbitration concerning Exxon Mobil’s claim of right of first refusal on Hess’ 30 per cent stake in a lucrative oil discovery in Guyana.
Hess disclosed that the arbitration panel is expected to issue a ruling by late August or September, following hearings set to commence in May.
“The three arbitrators that are in place now have been very clear. That’s when their decision is going to be rendered. And once that’s done, we’ll close our deal,” Hess added.
Chevron plans to leverage new and expanded oil production projects in Kazakhstan, the U.S. shale sector, and the offshore U.S. Gulf of Mexico to drive growth.
The company has projected oil production in the Gulf of Mexico to reach 300,000 barrels per day by 2026, up from 200,000 barrels in 2023.
In August, Chevron achieved a milestone by producing its first oil from a cutting-edge deepwater field in the U.S. Gulf of Mexico, a field expected to yield up to 75,000 barrels per day at its peak. The company has two additional offshore projects in the pipeline.
Exxon Mobil has been challenging the Chevron-Hess merger, particularly regarding its implications for Hess’ Guyana subsidiary.
Exxon contends that the transaction triggers its right of first refusal and alleges that Chevron structured the deal to sidestep this obligation.
The arbitration’s outcome and regulatory rulings on the merger, expected by 2025, will play a critical role in determining whether Chevron can successfully close the acquisition and cement its competitive edge in the global energy market.
