Exxon-Hess Arbitration Panel Poised for Formation, Sources Indicate

By Sabrina Valle

HOUSTON – The final member has been appointed to a three-person arbitration panel that will address Exxon’s claim against Chevron regarding the latter’s $53 billion acquisition of Hess Corp, according to sources familiar with the situation.

The formation of the panel marks a significant step in a protracted process that has created uncertainty surrounding the mega-merger, which both Chevron and Hess were hoping to finalize in the first half of 2024.

"The appointment of the full arbitration panel is nearly complete. We anticipate receiving more information about the schedule for the proceedings in the coming weeks," stated one source familiar with the developments.

Exxon initiated the arbitration claim with the International Chamber of Commerce in March, contending that it holds a right of first refusal over Hess’s assets in Guyana.

Exxon leads the oil production in Guyana, an area known for one of the largest recent oil discoveries, alongside partners Hess and China’s CNOOC.

Exxon argues that Chevron’s acquisition of Hess is an effort to bypass its right of first refusal concerning the valuable asset in Guyana. Meanwhile, Chevron and Hess believe that this right does not apply, citing the structure of the merger and the language in the Guyana partnership agreement.

To establish the three-member panel, each party selects one arbitrator, and the two chosen arbitrators then collaboratively nominate a third member.

On May 9, Hess CEO John Hess indicated he expected the final arbitrator to be appointed by May 17, according to a proxy adviser.

Exxon CEO Darren Woods has expressed concerns that the dispute could extend into 2025.

As of Tuesday, Chevron, Hess, and Exxon opted not to comment on the timeline for resolving the dispute.