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Hess shareholders accept $53 billion sale to Chevron

Hess shareholders on Tuesday approved the proposed $53 billion merger with Chevron that paves the way for the No. 2 U.S. oil company to acquire a prize asset and a foothold in competing Exxon Mobil's. enormous Guyana discoveries.

The approval clears one hurdle, but the deal still needs. regulatory approval and needs to deal with a lengthy arbitration battle. with Exxon and CNOOC, Hess' partners in Guyana.

Regulative approval could come next month, stated Frederic. Boucher, risk arbitrage analyst at Susquehanna Financial Group,. based on the time the Federal Trade Commission (FTC) required to. approve Exxon's acquisition of Pioneer Natural Resources earlier. this month.

However the most crucial step to approve the offer, he stated,. is a resolution of the dispute submitted by Exxon and CNOOC. asserting they have a right of very first refusal to any sale of. Hess's Guyana possessions.

A bulk of Hess's 308 million shares outstanding ballot. in favor of the offer was needed for approval. Results were. initial and Hess did not instantly offer the vote tally.

The vote is a win for CEO John Hess, who put his track record. and the future of a company established by his dad on the line.

The result puts to rest claims by some shareholders who. wanted extra compensation for the hold-up in closing the. sale. Exxon's arbitration could press the offer's closing into. 2025.

We are extremely happy that the majority of our stockholders. recognize the engaging value of this tactical deal and. look forward to the successful conclusion of our merger with. Chevron, CEO Hess said.

Hess and Chevron shares gained on the results. Hess increased a. portion to $152.05 and Chevron climbed less than 1% to $159.04.

Assuming Chevron wins the arbitration from Exxon or discovers a. settlement, the deal is now going to occur, said Mark. Kelly, an expert with financial firm MKP Advisors.

The yes vote has big implications for both business. Getting the rewarding oilfields in Guyana from Hess would. offer Chevron with a means to alleviate the geopolitical threats. connected to the TengizChevroil job in Kazakhstan, which mainly. carries its oil through Russia to a port on the Black Sea.

In addition, this acquisition could counterbalance the expense. overruns experienced at Chevron's Australian liquefied natural. gas (LNG) jobs, which have been affected by labor and. functional problems.

Obtaining Hess's Guyana holdings would fill out Chevron's. oil and gas reserves and supply a brand-new avenue for production. growth, beyond their existing operations in the U.S. and Central. Asia, said Allen Good, an expert with Morningstar financial investment. company.

Hess investors will own nearly 15% of the much bigger. Chevron and get access to its dividend, which is four times. higher than Hess'.

The investor sign-off also strengthens the business'. hand in any negotiations with Exxon. While Exxon has expressed. no interest in bidding for Hess as a whole, it has actually not eliminated. a potential bid for Hess' assets in Guyana.

It's excellent Chevron cleared this obstacle provided the rumblings. over the unpredictability of the Guyana arbitration, Good said. However, I do not believe it will affect the outcome of Exxon's. claim.

Chevron prepares for moving the FTC regulative procedure. towards its conclusion in the coming weeks, a spokesperson stated.

We are confident our position on the preemption right will. be verified in arbitration, the business stated.

Exxon operates all production in Guyana with a 45% stake in. the giant Stabroek Block. CNOOC owns another 25% of the. joint-venture. Both claim a right of first rejection on any Hess. sale of its 30% stake.

Proxy firm Institutional Investor Solutions had. recommended shareholders vote to stay away and prompted Hess to use. a reward to shareholders since of the offer delay.

John Hess spent the last month lobbying big shareholders. to win support for the merger. He had personally gone to or. called more than 30 companies, according to individuals knowledgeable about the. matter.

(source: Reuters)