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ExxonMobil's chief executive has insisted that its tense dispute with Chevron over a valuable oil field in Guyana will not harm the working relationship between the two American oil companies, even as the dispute threatens to derail the biggest takeover in Chevron's history.
Exxon has begun an arbitration process against Chevron over the latter's $53 billion deal to buy Hess, arguing that it has a right of first refusal regarding Hess's stake in the oil-rich Stabroek block off the coast of Guyana.
The high-profile standoff between the two companies threatens to complicate their relationship as they work together on joint projects from Kazakhstan to Australia. But Darren Woods insisted that companies and their leaders would be able to maintain a “collaborative” relationship.
“It's business. Business is business,” Exxon's CEO told the Financial Times on the sidelines of the CERAWeek energy conference in Houston on Monday.
“There are a lot of examples where we partner with them where they take positions that we don't agree with, and we basically fight it, work it out, do whatever we're going to do, and at the end of the day we keep going.”
Guyana was thrust into the spotlight after an Exxon-led consortium in 2015 made what proved to be the world's largest oil discovery in the past decade. Exxon has a 45 percent stake in the Stabroek area; China National Offshore Oil Corporation owns 25 percent; Hess owns the remaining 30 percent, which would pass to Chevron if the deal is completed.
The dispute between the two giant US oil companies dominated discussions on and offstage at CIRA Week, an annual gathering of the biggest names in the oil and gas industry.
“Heroes may have politeness and a constant smile toward each other, but they must be angry,” said Paul Sankey of Sankey Research. “We struggle to think of any instance in the history of oil on Wall Street where a corporate takeover led to asset-level preemptive action.”
Woods said he has no plans to meet with his Chevron counterpart, Mike Wirth, who will address the conference on Tuesday. Wirth did not attend a dinner with nearly two dozen top industry executives Sunday night, including Woods.
“I think Mike and I have a good relationship. We're partners on a lot of projects around the world today already. We work very collaboratively together,” Woods said.
Chevron did not immediately respond to a request for comment. She previously said she did not believe the right of first refusal applied in this case, and that she would withdraw the deal if the arbitration decision was not in her favor.
Exxon argues that its right to pre-empt the sale of the stake in Stabroek is contained in a joint operating agreement with Hess and Knock. But Woods said Monday that the company has no interest in acquiring Hess itself.
“We've de-risked and invested value in that, and that's the opportunity that we think we've got and we're getting it based on the contract that we have. And the deal that Chevron has designed is trying to prevent that or get around it and deny it.”
“[Guyana] It was one of the most successful deepwater developments in the history of the industry. “We have played a huge role in driving this development, the success it has had and the value it has created, and we have a contract in place.”
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Analysts speculated that Exxon took an aggressive stance on Guyana because it received highly lucrative terms from the government to support its development with billions of dollars.
Guyana has been an unusual story and it is clear that Exxon and its partners have been given very competitive terms to develop the resource,” said Daniel Yergin, vice president of S&P Global, host of CERAWeek.
“When you get into something that's a random venture, where people fail to find oil, and you're going to spend billions of dollars, you know, the terms have to be competitive to attract you to it,” Yergin said.
