Exxon raises questions about Chevron’s $53 billion deal for Hess

America’s two largest energy companies, Exxon Mobil and Chevron, are competing for a prized new oil resource in the waters off Guyana, Latin America.

The dispute casts doubt on Chevron’s bid to acquire Hess Corp. for $53 billion, which was announced in October. Chevron warned this week of the possibility that “the merger would not be completed” because of the dispute.

At the heart of the deal is Hess’ investment in Guyana, where an Exxon-led group has discovered as much as 11 billion barrels of oil and gas in an area known as the Stabroek Block. With just 800,000 inhabitants, Guyana, long one of Latin America’s poorest countries, is now compared to Qatar, the natural gas-rich emirate on the Persian Gulf.

Exxon has raised concerns about Chevron’s attempts to gain access to this oil bonanza through a proposed purchase of Hess’s 30 percent stake in Stabroek. Under the agreements governing the block, Exxon may be entitled to a right of first refusal – known in the jargon as a right of first refusal – where development partners share in each share sold. Exxon owns 45 percent of Stabroek and is the operator or manager of the area. The third partner in Stabroek is CNOOC, a large Chinese energy company.

Exxon appears to believe that it should be rewarded for the financial risks it has taken in developing Guyana’s oil resources and the technological contributions it has brought to the country.

“We owe it to our investors and partners to consider our pre-emptive rights under our Joint Operating Agreement to ensure that we retain our right to realize the significant value we have created and are entitled to in the assets in Guyana,” Exxon said. in a statement.

Chevron said in a securities filing that the companies engaged in what it called “constructive discussions” about the situation and said it believed the talks would lead to an outcome that would allow the merger with Hess to proceed. However, Chevron warned that if the talks do not “lead to an acceptable solution,” the deal could be called off.

But Chevron emphasized that there was “no possible scenario” in which Exxon could acquire Hess’s position. If the merger fails, Hess would continue to operate as an independent company, Chevron said.

In its statement, Chevron said it does not dispute the existence of the so-called pre-emption right, but said the company believed the legal structure of the Hess purchase means it does not apply.

The skirmishes demonstrate Guyana’s coveted status in the oil industry. It is one of the few countries, along with the United States and Brazil, whose output growth is expected to keep the Organization of the Petroleum Exporting Countries on the defensive.

Guyana is in the early stages of a rapid recovery. Chevron said Hess’ share of production was about 110,000 barrels per day, but analysts forecast that amount could quickly grow severalfold.

The potential wealth has already drawn unwanted attention from neighboring Venezuela, which has revived old claims to much of Guyana. Venezuela’s economy has collapsed amid political unrest that has also sharply reduced its own oil production.

It is not difficult to understand Exxon’s interest. Acquiring the stake in Hess “makes sense” because it would give the U.S. company an even larger share of “a highly valued asset” it already controls, Biraj Borkhataria, an analyst at RBC Capital Markets, said in a research note on Tuesday. However, Mr. Borkhataria noted that Exxon would have even more exposure to a country “that is already party to a potential border dispute.”

Because Chevron agreed to pay a high price for Hess, investors might initially welcome the company’s walkaway, Mr. Borkhataria said. Hess’s shares were likely to take the biggest hit, with Chevron having agreed to a premium of around 10 percent.

Hess shares fell 3.5 percent on Tuesday.