No More Oil Hedging For Hess After $53B Chevron Acquisition

, Bloomberg reported on Monday. Chevron announced the acquisitions of Hess, a major feature in Guyana offshore production, on Monday, in the second mega merger announcement this month, following Exxon’s offer of a $59.5-billion all-stock deal for Pioneer Natural Resources. “We plan to discontinue the use of put options to hedge,” Chevron Chief Executive Officer Mike Wirth told Bloomberg on Monday. “That’s just a cost that we won’t incur as we put the two companies together.

Hedging crude has declined since the pandemic as American shale drillers have adopted a more disciplined approach to the markets. Now, with the escalation of tensions in the Middle East following the Hamas attack on Israel and Israel’s heavy-handed response, put options have seen their value decline. In 2021, while oil prices were rising, Hess took a big risk by hedging its position on 2022 crude against a future fall in prices.

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