Chevron’s profits decline as the arbitration over the Hess merger continues.
On Friday, Chevron Corp reported a significant decline in its second-quarter earnings, and its CEO indicated that closing the $53 billion acquisition of Hess Corp may not happen until mid-2025, causing shares to drop by 3%.On Friday, Chevron Corp reported a significant decline in its second-quarter earnings, and its CEO indicated that closing the $53 billion acquisition of Hess Corp may not happen until mid-2025, causing shares to drop by 3%.
Since Wednesday, the company’s shares have fallen by 9% following statements suggesting that the Hess deal could be delayed by another year or potentially blocked altogether.
Chevron is banking on the Hess acquisition to gain a foothold in Guyana, where there has been a major oil discovery, and to offset challenges faced by its underperforming oil projects in Australia and Kazakhstan, which have experienced production issues and delayed maintenance into the third quarter.
The company had already anticipated a decrease in oil output and refining margins for the quarter, but the actual declines were larger than investors expected.
Quarterly earnings fell 19% to $2.55 per share, missing both the previous year’s figure and Wall Street’s consensus estimate by 38 cents.
CEO Michael Wirth acknowledged that operational issues and other factors affected the results this quarter.
The planned entry into Guyana’s offshore oil fields has been complicated by a dispute with Exxon Mobil, and the slow arbitration process is expected to push the deal’s closure well into 2025.
When asked about the possibility of a compromise with Exxon, Wirth mentioned that while such an idea would be “sensible” and had been pursued, it seems unlikely to resolve the situation.
