Chevron Corporation CVX recently disclosed that its oil and gas reserves have hit a decade low, highlighting the importance of its planned $53 billion acquisition of Hess Corporation’s HES stake in the Guyana oilfield. In 2024, the oil giant's reserve replacement ratio (RRR) fell to -4%, signaling that its reserves are depleting faster than it can replenish them. This declining reserve has raised concerns among analysts, making Hess’ Guyana assets crucial to Chevron’s prospects.
In the last few years, Chevron’s Reserve Replacement Ratio (RRR) has significantly declined. The company’s reserves dropped from 11.1 billion barrels of oil equivalent (boe) in 2023 to 9.8 billion in 2024, raising concerns among analysts about Chevron’s long-term output.
Over the past 10 years, Chevron’s RRR has averaged 88%, and the organic replacement ratio (excluding sales and acquisitions) stood at just 45%.
The company’s reserves replacement ratio (RRR) below 100% necessitates acquiring new assets to boost its RRR in the short term. Therefore, Chevron, currently carrying a Zacks Rank #3 (Hold), is looking forward to completing the long-pending Hess acquisition. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In order to preserve its dwindling reserves, Chevron is looking forward to finalizing its long-pending acquisition of Hess’ 30% stake in Guyana’s Stabroek block, where Exxon Mobil Corporation XOM and its partners have discovered over 11 billion barrels of recoverable oil. If Chevron is successful in acquiring the deal, it would gain a significant foothold in one of the most prolific oil regions.
However, Exxon Mobil and CNOOC, Hess’ current partners, are seeking the deal, claiming a right of first refusal on Hess’ stake in the project. The ongoing negotiation has stalled Chevron’s acquisition, with the outcome holding major implications for all parties involved.
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