Analyst Questions 'What Could Hess Be Worth?' As Chevron Advances In Acquisition Efforts

Group 1: Merger and Antitrust Review - Hess Corporation and Chevron Corporation shares are trading higher following the completion of the Federal Trade Commission's antitrust review of their merger, satisfying a critical closing condition for the transaction [1] - To facilitate the merger, Hess CEO John Hess will not be on the Chevron board [1] Group 2: Valuation and Production Estimates - Piper Sandler analyst Ryan M. Todd raised the valuation of Hess's stake in the Guyana oil-producing joint venture from $40.6 billion to $45.6 billion, translating to a share price range of $132 to $149 due to increases in discovered resources and productivity [2] - The analyst estimates Hess's stand-alone value at around $170 per share with Brent priced at $75 per barrel, indicating a compelling value opportunity for the first time in years [3] - Current production in Guyana was 192 kbd (net to Hess), with expectations for net production to peak at around 775 kbd, reflecting a 17% annual CAGR for nearly a decade [4] Group 3: Financial Projections - Peak cash flow from operations (CFO) and free cash flow (FCF) are projected at $10.3 billion and $8.7 billion, respectively, compared to a breakeven of $2.2 billion in 2023 [4] - Wolfe Research analyst Doug Leggate upgraded Hess from Peer Perform to Outperform with a price target of $150 [4] Group 4: Market Outlook and Scenarios - The bullish outlook reflects the view that current market conditions and potential merger outcomes provide Hess shares with an attractive risk/reward profile, regardless of the merger with Chevron [5] - Three scenarios support a positive outlook for Hess: successful merger with Chevron, trading based on fundamentals if the merger fails, and a potential acquisition interest from Chevron if the merger does not proceed [5][6]