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Chevron has agreed to buy US oil and gas producer Hess Corporation in a $53bn all-stock deal, in the latest step in the consolidation of the US energy sector.

The deal values Hess’s equity at $53bn, with the total enterprise value of the transaction, including the company’s debt, amounting to $60bn. It comes after ExxonMobil acquired Pioneer Natural Resources earlier this month for an enterprise value of $64bn.

The transaction comes as US energy companies look to deploy the bumper profits created by the energy crisis to consolidate a sector that faces long-term challenges as developed countries attempt to sharply reduce their reliance on fossil fuels.

But US energy majors such as Chevron and ExxonMobil have largely pinned their future on the long-term resilience of oil and gas demand, and are keen to build scale in the US shale patch alongside the fast-growing frontier play of Guyana.

Their stance is in contrast to some European energy majors such as BP and TotalEnergies, which are increasing investments in renewable energy at a faster pace than their US peers.

In an interview prior to announcing the acquisition, Chevron chief executive Mike Wirth defended the company’s plans to continue growing its output of oil and gas, arguing that Chevron was “not selling a product that is evil. We’re selling a product that’s good.”

He also criticised forecasts from the International Energy Agency, the developed world’s energy watchdog, that show fossil fuel demand peaking before the end of this decade.

“I don’t think they’re remotely right,” Wirth told the Financial Times. “You can build scenarios, but we live in the real world, and have to allocate capital to meet real-world demands.”

Wirth said in a statement that the deal “positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets”.

Hess’s assets include a 30 per cent stake in an 6.6mn-acre, 11bn barrel, offshore oil exploration scheme in Guyana and a 465,000 acre shale project in Bakken, North Dakota.

Hess chief executive John Hess, who is expected to join Chevron’s board, said the merger would create a “premier integrated energy company”.

Hess had “one of the industry’s best growth portfolios including Guyana, the world’s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer,” he said.

As part of the deal Chevron said it would issue approximately 317mn shares of common stock. It said it expected to increase proceeds of asset sale to $10bn-$15bn through 2028, before tax. The combined company’s capital expenditure budget would be between $19bn and $22bn.

The companies said they expected cost savings of about $1bn within a year of closing.

Prior to the announcement, Wirth had told the FT that big deals were “more difficult today”, noting that companies were better run than they were when Chevron bought Texaco for $36bn in 2000.

“Could it happen? I think it probably could,” he said, but he added regulatory challenges had grown and combining big companies could be complicated.

Chevron was advised by Morgan Stanley and Evercore on the deal, while Hess was advised by Goldman Sachs and JPMorgan.

Lawyers on the deal were Paul, Weiss, Rifkind, Wharton & Garrison for Chevron and Wachtell, Lipton, Rosen & Katz for Hess.

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