Chevron CEO’s Career-Defining Win Means Healing Rift With Exxon
(Bloomberg) -- As the dust settles from a bruising legal battle over the world’s marquee oil bonanza, the leaders of Exxon Mobil Corp. and Chevron Corp. face a new challenge: collaboration.
Chevron’s victory in an international arbitration dispute initiated by Exxon allowed the $53 billion takeover of Hess Corp. to proceed. The prize for Chevron Chief Executive Officer Mike Wirth is a highly coveted stake in a cache of premiere oil discoveries in Guyana.
The catch is that Exxon is the majority owner and operator of those oil fields, which means two of the world’s largest energy behemoths must mend any lingering rift and forge a new partnership. It’s unclear whether enough time as passed to clear any bad blood.
“We tried early on to resolve this and thought we were working together in good faith,” Wirth said in a Bloomberg Television interview on Friday. “And then abruptly we were notified that the other parties decided they wanted to decide through arbitration.”
Even so, Wirth extended an olive branch to Exxon CEO Darren Woods, whose demand for arbitration threatened to derail the biggest deal of Wirth’s career.
For its part, Exxon indicated acceptance of Wirth’s peace offering, pledging to “welcome Chevron to the venture.” The 30% stake in a tranche of Guyanese crude discoveries is the crown jewel of the Hess deal, the zenith of Wirth’s seven-year tenure as CEO so far.
“Partnership is one of our core values, and we pride ourselves on being a good partner around the world with many, many different companies,” Wirth said in a telephone interview. “We partner with Exxon on projects elsewhere in the world and have for many many years, and I’m sure we will find a way to move forward.”
Exxon’s surprise March 2024 demand for arbitration to halt Chevron’s acquisition of Hess cast a long cloud over the suitor company and its share price, calling into question Wirth’s ability to amass sufficient undrilled oil reserves to bolster future production.
Any such doubts have evaporated. Now, the former foes must find a way to return to business as usual, which for international oil giants routinely involves multibillion-dollar partnerships to execute some of the riskiest ventures on the planet.
“They are both big boys and they’re going to be just fine,” Andrew Gillick, managing director at research firm Enverus, said in an interview.
The companies already had longstanding partnerships in places like Kazakhstan and Australia, he noted. Besides, joint ventures are an essential feature of the most-ambitious oil developments because of the need to spread costs and risks, Gillick said.
“No supermajor wants to do one of these projects on their own,” Gillick said. “The risk is too high historically.”
The legal clash was unprecedented in the modern history of Big Oil. Exxon, which discovered billions of barrels of crude in the Stabroek Block off the coast of Guyana, claimed it had a right of first refusal over Hess’s 30% stake. That argument ultimately failed to sway the arbitration panel.
“We welcome Chevron to the venture and look forward to continued industry-leading performance and value creation in Guyana for all parties involved,” Exxon spokesperson Todd Spitler wrote in an email.
Wirth noted that he and Woods have chatted “from time to time” during industry events even as the arbitration process was underway.
“I try to maintain a professional and respectful relationship with all my industry colleagues,” Wirth said. “I’m focused on whats best for Chevron and our shareholders and that’s really where my energy’s directed.”
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