Reuters is reporting that the U.S. Federal Trade Commission (FTC) will approve oil major Chevron’s (CVX) $53 billion purchase of rival Hess Corp. (HES).
The FTC approval comes nearly a year after Chevron first announced its bid to takeover Hess, and clears a major hurdle to closing the deal. Previous uncertainty over whether the acquisition would proceed had sent CVX and HES stocks lower. However, news that the American regulator is planning to greenlight the deal sent Hess stock up more than 1% in extended trading. Chevron’s stock was flat on the news.
One Hurdle Remaining
Despite winning the blessing of the FTC, Chevron’s takeover still faces one remaining hurdle. Another U.S. oil major, Exxon Mobil (XOM), is challenging the acquisition in court. Exxon is a partner of Hess’ in a Guyana oil project. As such, Exxon Mobil is challenging the deal by claiming a right of first refusal to any sale of Hess’s Guyana assets, which is one of the main reasons Chevron has pursued the acquisition.
A three-judge arbitration panel is scheduled to hear Exxon Mobil’s challenge to the deal in May 2025. Chevron says a decision is expected by August of next year. In addition to the Guyana oil field, the Hess acquisition will give Chevron new ground in the oil-rich Permian Basin of Texas. The proposed all-stock purchase of Hess is one of the largest in the history of the U.S. oil and gas industry.
Is CVX Stock a Buy?
Chevron’s stock has a consensus Moderate Buy rating among 12 Wall Street analysts who cover the company. This is based on eight Buy and four Hold recommendations made in the last three months. There are no Sell ratings. The average price target on CVX stock of $179 implies 21.32% upside from current levels.
