God I’m gonna enjoy this. This is what competent looks like fam.
https://oilprice.com/Latest-Energy-News/World-News/Exxon-Is-Sure-It-Has-Right-Of-First-Refusal-In-Spat-Over-Guyana-Oil-Assets.html
8 replies (most recent on top)
Exxon is spooling up a multimillion dollar legal fight because they’re “just peeved? Unlikely. And the fact the Chinese have joined their side doesn’t make our case look any stronger.
Someone is going to look very d-mb by the end of this.
Exxon is better off with it employees 401K.
Chevron will maintain the Hess Guyana legal entity that owns rights there. So there will be no change of ownership.
I agree, Exxon is just peeved. They compete with Chevron and Chevron has been beating them last 15 years. Look at the stocks P/E of both companies.
OBO is a better way of using one’s money, especially if other operator is competent. I think it’s a master stroke by Chevron to squeeze Exxon. They operate our Permian and we make more returns because of our advantaged royalties. Next, we squeeze their Guyana.
These both are their top assests of their portfolio. We have upper hand on those two as explained above.
Next is their dog assets they can’t get rid of. Can you believe they still have mining and oil sands ? Next - they have really bad low margins downstream assets, which we got rid of much early. Also they are no longer favorable with their LNG with Qatar.
This is perfect play by Chevron, and Exxon knows it but can’t digest the news. So they are playing cheap tactics that they know they will lose.
It just makes them look desperate in the eyes of analyst community (I work for one )
I’m no expert in contract law (although from the looks of it no one at Chevron is) - but I’m guessing Exxon wouldn’t be perusing this, and publicly flexing about it, if they didn’t have at least a decent chance to prevail. One side appears to be getting bad legal advice…
When you buy the company as a whole, the rights of that company stay intact. Consider that Chevron could structure it's buy to maintain Hess as a fully owned subsidiary (Preserving Hess intact on paper while merging the whole transparently into Chevron management structure in practice). Exxon's contract specifying first refusal refers to the sale of this asset, but the asset is not being sold. This is no different than if I sold my stock in Hess: Exxon does not have the right to carve out parts of that stock's value that it wishes to ascribe to its JV and demand that my sold shares somehow are separated into two new types of shares reflecting their asset separated from the rest. Without seeing the specific language of the contract, the whole argument is rather farcical. I expect that they know they will lose, but are hoping for some other type of advantage.
Oh, I initially thought this story was going to be about Exxon taking its employee’s lunch money. Looks like it was only click bait.
You'll notice Exxon says the "intent" not the contract language supports their argument. They'll get some concessions, delay the merger, but ultimately lose. Otherwise, any change of large shareholders would trigger the so called right of first refusal.