Another Powerhouse Merger: Chevron Buying Hess for $53 Billion
Not even a full two weeks ago, MDN brought you the news that Exxon Mobil, the #5 oil producer in the Permian Basin, is buying Pioneer Natural Resources, the #1 oil producer in the Permian, in an all-stock deal valued at $59.5 billion, plus assuming $5 billion in debt, for a total deal value of $64.5 billion (see Shale Megadeal: Exxon Buys Pioneer Natural Res. for $64.5 Billion). We told you that experts were predicting Exxon’s megamerger with Pioneer would touch off more mergers. And it has. Chevron announced via press release this morning that it is buying Hess Corporation in an all-stock transaction valued at $53 billion. Chevron doesn’t want to be left behind in the oil drilling wars.
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Last Thursday, Ascent Resources, a company founded by Aubrey McClendon after he left Chesapeake Energy, announced it is buying 113,400 Utica Shale acres along with 93 operating wells located in eastern Ohio for $1.5 billion. The new acreage tips Ascent over the 300,000 Utica acre line and catapults the company into one of the largest privately owned drillers (exploration and production) in the U.S. The companies doing the selling are CNX Resources and Hess (selling a joint venture they co-owned, each selling their share for $400 million each, for a total of $800 million), Utica Minerals Development (a subsidiary of First Reserve, a private equity firm headquartered in Greenwich, CT, and EMG), and a fourth, unnamed mystery seller. The CNX/Hess acreage (78,000 net acres of the 113,400 acres) is located in the wet gas window of Belmont, Guernsey, Harrison and Noble counties. We’re not sure about the location of the other acreage. The CNX/Hess jv sale marks Hess’ total exit from the Utica Shale. So how will Ascent pay for all of their new shiny new assets? 
It’s been a while–quite a while–since we’ve heard anything about Hess’ Utica drilling program. The last article we ran on Hess drilling in the Utica was in April 2016 when Hess management said that while they have “good rock” in the Utica, they would mothball their Utica operations until more pipelines are built. Looks like the pipelines are built. We spotted a story that gives new information about Hess’ plans in the Utica. They currently have 59 wells producing in the Ohio Utica. They’re working to complete another 5 previously drilled (in 2015?) wells, which will give them 64 producing wells “in the next month or so.” As for new drilling, the company will hopefully restart their program to drill new wells “hopefully in mid-2019.” Here’s what Hess’ “Utica operations area lead” guy had to say at a Kiwanis Club meeting last week in Steubenville about how much, and where, they’re drilling in the Utica…
Yesterday Hess Corporation released their first quarter 2016 update. A few years ago Hess sold off its downstream (refinery and filling station) business to Marathon Petroleum. Did you know the Hess Truck is no longer owned by Hess (see 
Hess Corporation released their 2016 capital and exploration budget yesterday. Last October Hess said they would spend $2.9-$3.1 billion during 2016. Throw that out the door. They’ve now dropped the capex budget to $2.4 billion, which is 40% less than they spent in 2015. Hess has maintained an active drilling program in the Ohio Utica Shale. What part of that $2.4 billion do you suppose they plan to spend in the Utica this year? The number is $45 million, which will be spent on drilling five new wells and bringing a total of 14 wells online–all in the first quarter. After that? They’re releasing the single rig they now have under contract. So Hess is spending 1.9% of their budget on the Utica for 2016…
It’s obvious that Hess has pretty much given up on its Utica Shale drilling program. Just last week we told you that Hess is shopping the rest of its remaining Utica acreage (see 
In January 2014 Hess Corporation sold 74,000 of its 95,000 100%-owned Utica Shale acreage leases to Aubrey McClendon’s American Energy Partners for $924 million (see 
What’s going on at Hess? On Monday MDN told you that one of Hess’ board members, John H. Mullin III, had purchased 7,000 shares of Hess stock for $381,430 (called “insider buying”), bringing his total holdings of Hess stock to $3.2 million (see 
We occasionally bring you news of when senior management or members of the board of directors for an upstream (drillers) or midstream (pipelines) company either buy or sell shares of stock in their own company. It’s called “insider trading.” There are good reasons to do both–buy or sell. But let’s be honest, if you see upper management/board members repeatedly selling their shares of stock, it just doesn’t look good (see 
When MDN editor Jim Willis attends industry conferences, more often than not there is at least one, sometimes more than one, session on CSR, or Corporate Social Responsibility. CSR means oil and gas companies ensure they are in compliance not only with the letter, but the spirit of the laws and regulations under which they operate. It also means going beyond the minimum and being good neighbors and participating in the communities in which they operate. Our industry takes the CSR role seriously. So when we noticed that Hess was named the No. 1 oil and gas company on Corporate Responsibility magazine’s prestigious list of 100 Best Corporate Citizens for 2015, we thought it worth mentioning and giving them a shout-out for a job well done…