- Chevron is acquiring energy player Hess for $53 billion
- Fossil fuel firms are still in high demand, despite talk of a green revolution
- Chevron’s takeover gives it access to oil fields in Guyana and the Bakken shale formation
- Analysts believe combined control of Guyana’s oil supply could be worth $180 billion by 2027
- Exxon recently announced a $60 billion purchase of shale Pioneer Natural Resources
- M&A activity has been revived in the energy sector
- October has seen over $139 billion in takeovers of US companies, the highest amount since June 2019
- Roche announced a $7 billion acquisition and Disney is nearing a multi-billion sale of its Indian properties
- Goldman Sachs is the leader in M&A advisory services with a 26% market share
- FTC Chairperson Lina Khan’s antitrust efforts may not be stopping mergers
Chevron’s Hess Acquisition Fuels Broader M&A Frenzy in the Energy Sector
Chevron has made a significant move in the energy sector by acquiring energy player Hess in a deal worth $53 billion. This acquisition is taking place during a period of intense activity in the industry, despite talk of a green revolution and a deal drought on Wall Street. The International Energy Agency predicts that demand for oil and gas will continue to rise in the coming years. Chevron’s takeover will give the company access to valuable oil fields in Guyana and the Bakken shale formation in North Dakota. Some analysts believe that the combined control of Guyana’s oil supply by Hess, Chevron, and Chinese partner Cnooc could be worth $180 billion by 2027.
This acquisition is part of a broader trend of major deals in the energy sector. Two weeks ago, Exxon made headlines with its $60 billion purchase of shale Pioneer Natural Resources, marking the largest oil and gas deal in decades. The surge in M&A activity has brought the previously dormant space back to life. In October alone, over $139 billion in takeovers of publicly traded US companies have been announced, making it the busiest month for M&A since June 2019. In addition to the major oil deals, there have been other significant acquisitions, such as Roche’s $7 billion acquisition of bowel disease treatment company Telavant and Disney’s multi-billion sale of its Indian properties to Reliance Industries.
The current leader in M&A advisory services is Goldman Sachs, with a 26% global market share so far this year. Despite the bank’s retreat from consumer banking, it remains at the forefront of M&A. In contrast, FTC Chairperson Lina Khan’s efforts to curb mergers may not be as effective as anticipated. Microsoft recently completed its $69 billion purchase of video game giant Activision Blizzard, which is considered the largest merger in tech industry history. This suggests that Khan’s antitrust measures may not be able to prevent major mergers from taking place.
In conclusion, Chevron’s acquisition of Hess is just one example of the recent M&A frenzy in the energy sector. Despite calls for a green revolution, fossil fuel firms continue to be in high demand. The surge in deals reflects the ongoing profitability of the industry, fueled in part by record profits from the war in Ukraine. As major players in the sector use their wealth to make strategic acquisitions, it remains to be seen how this trend will shape the future of the energy industry.