Finvest
HES Oil and Gas · Merger arb · Guyana oil · E&P · Thesis updated June 12, 2026

Hess is a deal spread on Guyana

01 Running thesis

A legal ruling drives the stock

Hess is not a normal oil stock right now in the internal view. It is mostly a merger arbitrage case. That means investors are betting on the gap between Hess's trading price and the value they would receive if Chevron's all-stock deal closes.

The bull case is simple. Hess holders approved the Chevron merger on May 28, 2024. If the deal closes, they trade a smaller, more focused oil company for shares in a much larger energy major that still gets exposure to Guyana. Hess's 30% interest in the Stabroek Block is the prize.

The bear case is also clear. Exxon Mobil and CNOOC challenged whether a right of first refusal applies to Hess's Guyana stake. A right of first refusal is a contract right that can let partners buy an asset before it is sold to someone else. Hess said in its Q1 2025 filing that the arbitration hearing was scheduled for May 2025, with a decision expected in the third quarter.

There is a timing tension. Public reports after the thesis date say the arbitration was resolved in favor of Chevron and Hess and that the deal closed in July 2025. Finvest's stored thesis has not been rolled past Q1 2025, so the page keeps the deal risk as the core internal view and flags the later reports as a status check.

May 2025→Q1 2025 results did not change the core view. Shareholders had already approved the Chevron deal, but the Exxon and CNOOC arbitration remained the key hurdle.
Feb 2025▲The 2024 10-K showed strong production growth in Guyana and the Bakken. The Whiptail sanction helped the long-term Guyana growth case, while the JDA Block A-18 non-renewal hurt the Southeast Asia outlook.
Nov 2024→The Q3 2024 filing kept the thesis focused on the Chevron merger and the May 2025 arbitration hearing. Guyana production growth remained strong but was already expected.
Aug 2024→Initial view established Hess as mostly a merger arbitrage stock. The value rested on Chevron closing the deal and on continued execution in the Guyana Stabroek Block.
02 Business model

Oil barrels plus Bakken pipes

Hess makes most of its money by finding, producing, and selling crude oil, natural gas liquids, and natural gas. Its main production areas are Guyana, the U.S. Bakken shale, the Gulf of Mexico, and Southeast Asia.

Guyana is the growth story. Hess owns 30% of the Stabroek Block, where the partners are developing the field in phases using floating production vessels. The 2024 10-K said Guyana net production averaged 186,000 barrels of oil per day in 2024, up from 115,000 in 2023.

The Bakken is the other core pillar. Hess reported 204,000 barrels of oil equivalent per day of Bakken net production in 2024, up from 182,000 in 2023. This asset gives Hess a large U.S. production base while Guyana ramps.

Hess also owns about 38% of Hess Midstream LP on a consolidated basis. Midstream earns fees for gathering, processing, and transporting oil, gas, and water in the Bakken. That fee income is steadier than oil production, but it is still tied to activity in one basin.

03 Product portfolio

What Hess sells

Growth engine

Guyana crude oil

This is the main reason Hess is strategically valuable. The Stabroek Block is a large offshore oil development, and Hess owns 30% of it.

Cash cow

Bakken crude oil and liquids

The Bakken gives Hess a large U.S. production base. It helps support cash flow while Guyana grows.

Steady

Natural gas liquids

NGLs are produced along with oil and gas. Their prices move with energy markets, so they add value but also add commodity risk.

Steady

Natural gas

Hess sells natural gas from its producing fields. Gas prices can swing sharply, which affects earnings.

Steady

Midstream services

Hess Midstream gathers, processes, and transports hydrocarbons and handles water in the Bakken. Fees make this line more stable than pure production.

Option

Southeast Asia production

Hess still has assets in Malaysia and the Malaysia/Thailand Joint Development Area. The long-term value is lower after notice that JDA Block A-18 will not be renewed after 2029.

04 Business segments

Two reported segments

Exploration and Production90%growing fast
Midstream10%modest

The mix uses 2024 segment total revenues and non-operating income from Hess's annual report: E&P at $12.907 billion and Midstream at $1.511 billion. This is a segment mix, not a clean consolidated GAAP sales split, because segment totals can include items that do not map one-for-one to consolidated revenue.

05 Risk factors

What can break the thesis

ROFR arbitration blocks the Chevron deal

High impact · Medium odds

The internal thesis treats the Exxon and CNOOC arbitration as the main stock risk. If the ruling does not confirm that the Stabroek right of first refusal is inapplicable, the Chevron merger could be delayed, changed, or terminated. That could remove the merger spread and push Hess back to a standalone oil-stock valuation.

We watchThe final arbitration decision, Chevron and Hess closing notices, and any SEC filing that changes the merger conditions.

Status gap after Q1 2025

High impact · Medium odds

There is a live-data issue for readers. Hess's Q1 2025 filing still framed the deal as pending, while later public reports say Chevron closed the acquisition in July 2025 after winning arbitration. Until the internal thesis is updated, this is a status check rather than a thesis rewrite.

We watchCompany press releases, delisting notices, and Chevron filings that confirm whether HES shares still trade independently.

Guyana project delays or cost overruns

High impact · Medium odds

Guyana is the main growth asset. Delays in floating production vessel start-ups, drilling issues, or higher costs could reduce the value that Chevron wants and the standalone value of Hess. Multi-phase offshore projects can look steady until one schedule slips.

We watchStabroek production volumes, FPSO start-up dates, project cost updates, and partner commentary from Exxon, Hess, CNOOC, or Chevron.

Oil and gas price swings

High impact · High odds

Hess sells crude oil, natural gas liquids, and natural gas. Lower commodity prices would hit revenue and cash flow, especially if the company must be valued as a standalone producer. Higher prices help, but they do not remove legal and execution risk.

We watchBrent oil prices, U.S. natural gas prices, Hess realized prices, and quarterly cash flow.

Bakken concentration in Midstream

Medium impact · Medium odds

Hess Midstream has fee-based revenue, which is steadier than selling oil. But those fees mainly depend on Bakken activity. If Bakken volumes slow, Midstream growth can slow too.

We watchBakken net production, Hess Midstream throughput, and drilling and completion activity in North Dakota.

Southeast Asia asset fade

Medium impact · High odds

Hess was notified that the JDA Block A-18 production sharing contract will not be renewed after it expires in 2029. That does not break the near-term merger case, but it weakens the long-term standalone outlook for that region.

We watchProduction updates for the Malaysia/Thailand JDA and any disclosure about replacement opportunities before 2029.
06 Quick answers

In one breath

Why is Hess so tied to Chevron?

Hess agreed to an all-stock merger with Chevron, and Hess shareholders approved it in May 2024. The internal thesis says the stock is mainly a bet on whether that deal clears the Exxon and CNOOC arbitration risk.

What is the Stabroek Block?

The Stabroek Block is a large offshore oil area in Guyana. Hess owns 30%, Exxon operates the block, and CNOOC is also a partner.

What does Hess own besides Guyana?

Hess has major production in the Bakken shale in North Dakota, plus assets in the Gulf of Mexico and Southeast Asia. It also owns about 38% of Hess Midstream LP on a consolidated basis.

What should investors check first?

Check the current legal and trading status of the Chevron deal. The internal thesis is based on Q1 2025 filings, while later public reports say the merger closed in July 2025.