(Reuters) An arbitration panel that could approve or block the $53B sale of Hess (NYSE:HES) to Chevron (CVX) remains incomplete three months after the case was filed, delaying a decision on whether Exxon Mobil (XOM) has a right of first refusal over Hess’ Guyana operations, Reu-ters reported Thursday.
The third and final arbitrator has not been appointed, according to the report, a delay that could mean no decision will come this year as Hess (HES) has expected; each side in the dispute reportedly appoints one arbitrator and those two nominate the third.
“The market is hoping for a speedy settlement to the arbitration process, but has never understood properly what Exxon is trying to achieve,” MKP Advisors analyst Mark Kelly told Reuters. “It is widely believed that Exxon has never communicated this to even Chevron or Hess.”
The panel will consider Exxon’s (XOM) claim that Chevron (CVX) is trying to circumvent its pre-emption right included in the Guyana oil consortium’s joint operating agreement.
Exxon (XOM) executives have said the arbitrators should consider the “intent” behind the JOA made with Shell, its original partner in Guyana which sold its stake before oil was discovered there in 2015.
The question of right of first refusal generally “hinges on the specific wording of the JOA and on the value of the asset in relation to the larger change of control transaction,” according to Chris Strong, a partner at Vinson & Elkins law firm and VP for model contracts of the Association of International Energy Negotiators.
