Deal between Chevron and Hess was negotiated over dinner; CEOs' "friendly" discussions resulted in a $53 billion offer

 Deal between Chevron and Hess was negotiated over dinner; CEOs' "friendly" discussions resulted in a $53 billion offer

Years ago, the heads of Chevron Corp. and Hess Corp. had dinner together and began "friendly" discussions that eventually resulted in the $53 billion megadeal announced on Monday, the latest in a wave of consolidation that has been sweeping the US oil sector.

In an interview with John Hess from Hess on Bloomberg Television on Monday, Chevron CEO Mike Wirth said, "We have been treated as talking for a while." We have been completing this for a while and have noticed the fit and attraction.

Also Read: Chevron to purchase Hess for $53 billion in oil megadeal

Without specifying when they initially met, Wirth said that their dinner conversation served as the beginning of the megamerger. Since then, they have engaged in cordial conversations, he added. 

Chevron said in a statement that purchasing Hess would give them a 30% ownership stake in Guyana, one of the world's major new oil producers, which has recoverable resources of more than 11 billion barrels-equivalent. Additionally, it increases the amount of land in the Gulf of Mexico and the Bakken, a less significant US shale region than the Permian, where production has already reached its peak. 

After Hess shares almost quadrupled in value last year, the agreement moved into the "win zone" for both businesses, according to Hess in the interview. Wirth said, "Growing cash flow from Hess's Guyana asset also contributed to Chevron's interest in the deal."

"The stocks of the two organizations have traded into a range where it worked," said Wirth. "The moment has come.