Chevron (NYSE:CVX) agreed to buy Hess (NYSE:HES) for as consolidation in the American oil patch continued. Yet CVX stock is down today on the news.
It’s the second big deal this month, following Exxon Mobil’s (NYSE:XOM) agreement to buy Pioneer Natural Resources (NYSE:PXD) .
CVX stock fell 2% overnight. It opened this morning at about $164, a market capitalization of about $310 billion. West Texas Intermediate (WTI), the main U.S. grade of crude oil, was trading at about $88, down $2.50/barrel from its recent high.
Merger Mania?
, meaning the $53 billion price will be adjusted based on Chevron’s stock price. The Exxon-PXD deal was also an all-stock transaction.
Hess had been Exxon-Mobil’s partner in Guyana, discovering over off the South American coast. Chevron will now have Hess’ 30% stake in the project. Hess also had assets in North Dakota’s Bakken shale and a Southeast Asian gas business.
Chevron said the deal will let it return more money to shareholders through dividends and share repurchases. The company’s $1.01/quarter dividend now yields about 3.6%.
barely budged after the announcement. ConocoPhillips (NYSE:COP) was down 0.8% over the weekend. EOG Resources (NYSE:EOG
) was down 1.1%, and Occidental Petroleum (NYSE:OXY) was down 1.6%. Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) owns .
Oil prices have been volatile for the last year but are Moves by OPEC to have been offset by slow global growth and .
The head of OPEC calls oil investment but the latest deals show oil companies more interested in short-term profit than in generating new supply. The Energy Information Administration (EIA) predicts on short supply.
CVX Stock: What Happens Next?
Oil companies are loaded with cash thanks to global instability, but they are mainly using that cash to buy each other and .
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
