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The chief executive of ExxonMobil has insisted its tense dispute with Chevron over a prized Guyana oilfield will not damage the working relationship between the two US oil companies, even as the spat threatens to derail the biggest acquisition in Chevron’s history.
Exxon has begun an arbitration process against Chevron over the latter’s $53bn deal for Hess, arguing it has the right of first refusal over Hess’s stake in the oil-rich Stabroek Block off the coast of Guyana.
The prominent stand-off between the companies threatens to complicate their relationship as they work together on joint ventures from Kazakhstan to Australia. But Darren Woods insisted the companies — and their leaders — would be able to maintain a “collaborative” relationship.
“It’s business. Business is business,” the Exxon chief executive told the Financial Times on the sidelines of the CERAWeek energy conference in Houston on Monday.
“There are lots of examples where we partner with them where they take positions that we don’t agree with, and we basically fight it out, work it out, do whatever we’re going to do and at the end of the day we move on.”
Guyana has been thrust into the spotlight after an Exxon-led consortium in 2015 discovered what has proved to be the biggest global oil find of the past decade. Exxon holds a 45 per cent stake in the Stabroek Block; the China National Offshore Oil Corporation owns 25 per cent; and Hess holds the remaining 30 per cent, which would transfer to Chevron if the deal closes.
The dispute between the two US oil supermajors has dominated discussions both on and offstage at CERAWeek, an annual gathering of the biggest names in the oil and gas industry.
“The protagonists may have fixed-grin politeness towards each other but they must be furious,” said Paul Sankey of Sankey Research. “We struggle to think of any instance in Wall Street oil history where a corporate takeover has triggered an asset-level pre-emption.”
Woods said he had no plans to meet his Chevron counterpart, Mike Wirth, who will address the conference on Tuesday. Wirth did not attend a dinner with almost two dozen senior industry chief executives on Sunday night, including Woods.
“I think Mike and I have a good relationship. We’re a partner in a lot of projects around the world already today. And we work very collaboratively together,” Woods said.
Chevron did not immediately respond to a request for comment. It has previously said it does not believe the right of first refusal applies in this instance, and it will pull the plug on the deal if an arbitration decision does not go in its favour.
Exxon argues that its right to pre-empt the sale of the stake in Stabroek is baked into a joint operating agreement with Hess and Cnooc. But Woods said on Monday that the company had no interest in acquiring Hess itself.
“We de-risked it and invested in growing the value in that and so that’s the opportunity that we believe we have earned and are afforded based on the contract that we have. The deal that Chevron has designed tries to prevent that or to circumvent it, and to deny it.
“[Guyana] was one of the most successful deepwater developments in the history of the industry. We’ve been a huge part of driving that development and the success that it’s had and the value that has created, and we have a contract in place.”
Analysts have speculated that Exxon has taken an aggressive stance over Guyana because it had received very lucrative terms from the government to support its multibillion-dollar development.
Daniel Yergin, vice-chair of CERAWeek host S&P Global, said Guyana was an extraordinary story and Exxon and its partners had clearly been awarded very competitive terms to develop the resources.
“When you go into something that’s a rank wildcat, where people have failed to find oil, and you’re going to spend billions of dollars, you know, the terms have to be competitive to draw you in,” Yergin said.
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