FTC Blocks Hess CEO from Chevron Board Seat as Part of Deal, Sources Say – Reuters

HOUSTON (Reuters) – U.S. antitrust regulators are set to prevent Hess CEO John Hess from assuming a board seat as a condition for approving Chevron’s $53 billion acquisition of Hess, according to individuals familiar with the situation.

The Federal Trade Commission (FTC) will not permit Hess to join the board, although the reasoning behind this restriction has not been disclosed.

Chevron’s all-stock acquisition of Hess, announced in October, is part of a wave of significant mergers in the U.S. oil and gas sector, which includes Exxon’s earlier acquisition of Pioneer.

In an effort to scrutinize large mergers, the FTC had similarly disallowed Pioneer Natural Resources CEO Scott Sheffield from joining Exxon’s board as a condition for approving their $60 billion merger earlier this year.

It remains unclear whether Hess might hold another position at Chevron, though he recently joined the board of Goldman Sachs.

Neither Hess nor Chevron immediately responded to requests for comments, and the FTC declined to provide any statements.

Shares of both Hess and Chevron experienced a 1% decline during midday trading.

The anticipated approval would leave only Exxon’s challenge to the Chevron-Hess deal as a remaining obstacle. Exxon and China’s CNOOC Ltd have initiated arbitration that could obstruct the merger, claiming that it serves as a strategy to acquire Hess’s valuable assets in Guyana.

Hess holds a 30% stake in the Stabroek offshore block in Guyana, an area that has seen over 30 oil and gas discoveries since 2015. Exxon, the operator of the block, owns 45%, while CNOOC holds the remaining 25%.

Earlier reports indicated that the FTC is indeed blocking Hess from taking a board seat in the new combined company.

In the case of Exxon’s merger, the FTC accused Sheffield of collaborating with other U.S. oil companies and the Organization of the Petroleum Exporting Countries to maintain artificially low production levels and enhance profits for these companies.

The FTC cited various meetings held between shale and OPEC officials over several years, including private dinners at an energy conference in Houston.