Good morning. Jordan Blum, Fortune’s energy editor filling in for Alyson. I’ve reported on the oil and gas industry for a dozen years now, and the longstanding rivalry and recent legal battle between two Fortune 500 giants—Exxon Mobil (No. 8) and Chevron (No. 16)—is one of the biggest and most consequential contests I’ve ever covered.
The legal battle ended Friday, with the news that Chevron could complete its $53 billion acquisition of Hess (No. 327), which Exxon had sued to stop.
In brief: Way back in 2023, Chevron announced its planned all-stock acquisition of Hess. Sure, Chevron wanted Hess’s U.S. oil and gas production, but the real prize was access to Hess’s share of what is arguably the biggest oil discovery of the century, offshore of sparsely populated Guyana.
The issue? It was Exxon that originally made the Guyana discovery 10 years ago and operates the exploration and production there; it argued that it had the right of first refusal for Hess’s ownership of the Guyana stake.
With Chevron’s big win in arbitration, Exxon will continue to lead the Guyana partnership with its 45% ownership stake, while Chevron will join as a 30% owner. China’s CNOOC holds the remaining 25%.
The Chevron-Hess deal had quickly followed Exxon’s $60 billion acquisition of Pioneer Natural Resources in West Texas’s booming Permian Basin, as the top two Big Oil giants continue to fight for scale in a world that seems increasingly smaller.
RBC Capital analyst Biraj Borkhataria said in a note that many investors have sat on the sidelines, awaiting the arbitration results, and that Chevron is now set to benefit. He said the industry can now move on beyond the “soap opera” and expect Chevron shares to outperform in the coming weeks.
With both energy demand and energy security concerns growing worldwide—more than 10% of the Fortune 500 is now composed of energy companies—this legal dispute is a big sign that top industry rivals will fight harder for every barrel of the biggest oil and gas assets in the world, especially as major discoveries become fewer and fewer.
—Jordan Blum, energy editor
