Despite the vilification and the billions of dollars being spent on alternative supplies of energy, fossil fuels are far from vanquished. Oil and gas are doing well in the U.S., and coal is holding its own.
This morning (Oct. 20), Chevron announced it is buying Hess Corp. in an all-stock deal worth $53 billion ($171/share). Chevron’s interest in Hess is based on Hess’s heavy presence in the South American country of Guyana. In a news release, Chevron said, “The Stabroek block in Guyana is an extraordinary asset with industry leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade.” Hess also has a solid presence in the oil-rich Bakken formation in western North Dakota, eastern Montana, and southern Saskatchewan in Canada.
The New York Times commented that the Chevron deal “marks further consolidation of the oil industry and highlights the confidence that energy companies have in the future of fossil fuels.”
The deal comes just two weeks after Exxon announced a $60 billion deal to buy independent producer Pioneer Natural Resources in an all-stock deal ($253/share). Pioneer is a major producer in the Permian Basin in Texas and New Mexico, using fracking technology to develop from shale deposits not reachable before the advent of directional drilling and hydraulic fracturing.