Hess Earnings: Latest Guyana Development Comes Online, Driving Crude Volumes Higher

Our fair value estimate for Hess is unchanged at $176 due to the pending merger with Chevron. We also maintain our narrow moat rating. We still believe that this offers a great value to shareholders, representing a significant premium to our premerger valuation of $118. There remains a risk, namely the Federal Trade Commission investigation, which may end up postponing the close of the deal. At this point, we see little likelihood the deal would not close eventually given the limited risks to competition as the crown jewel, Guyana, is a nonoperated minority stake. Hess' Bakken operations would elevate Chevron to a top producer in the basin, but we don't see a change in the competitive environment in the basin as a result of the deal, so we don't think the investigation will force any changes. Despite the announced investigation, there has been no change to management's estimated first half of 2024 close.