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November 12, 2026 • 1-minute read
In the first in our series on JOA issues, we discuss the recent Stabroek JOA Arbitration decision and what it means for JOA parties considering their own JOA Change in Control provisions.
Chevron’s $53 Billion Hess Takeover
Chevron Corporation’s (“Chevron”) high-profile $53 billion merger with Hess Corporation (“Hess”) has now closed, having recently garnered significant attention, both for its scale and the related arbitration that could have derailed it.
On 18 July 2025, an International Chamber of Commerce tribunal ruled in favour of Hess, dismissing ExxonMobil Corporation’s (“Exxon”) claim that it had a right of first refusal (“ROFR”) over Hess’s interest in the Stabroek block, located offshore Guyana. The tribunal’s decision allowed the merger to proceed, which may have set a significant precedent for joint ventures in the oil and gas sector.
Background: The Stabroek Joint Operating Agreement
The Stabroek block, discovered in 2015, is one of the most significant oil finds in recent decades, estimated to contain over 11 billion barrels of oil. The block is operated by an affiliate of Exxon (Esso Exploration and Production Guyana Limited (“EEPGL”)), which has a 45 percent holding, alongside Hess Guyana Exploration Limited (“HGEL”), which holds 30 percent, and an affiliate of China National Offshore Oil Corporation (“CNOOC”), which holds the remaining 25 percent. The parties’ relationship is governed by a Joint Operating Agreement (“JOA”), although the precise terms remain confidential.
The history of the Stabroek JOA is complex. EEPGL originally signed the production sharing contract with the Government of Guyana in 1999. An affiliate of Shell plc (Shell Exploration and Production Guyana Limited) entered the licence in 2009 and 2012, before assigning its interest back to Exxon in 2014. That same year, HGEL and CNOOC farmed into the block, resulting in the current ownership structure. While its precise terms are unknown, it is widely believed that the JOA was based on a version of the model international joint operating agreement published by the Association of International Energy Negotiators1 (formerly the Association of International Petroleum Negotiators).
In filings, Chevron has stated that “[t]he Stabroek JOA contains a right of first refusal . . . provision that, if applicable to a change of control transaction and properly exercised, provides the Stabroek Parties with a right to acquire the participating interest in the Stabroek Block held by the Stabroek Party subject to such transaction (at a value that is based on the portion of the value of the change of control transaction that reasonably should be allocated to such participating interest and is increased to reflect a tax gross-up) only after, and conditioned on, the closing of such transaction.”2
The Merger and the Dispute
In October 2023, Hess and Chevron announced a definitive merger agreement. The structure involved a Chevron subsidiary merging with Hess, with Hess continuing as the surviving corporation and a direct, wholly-owned subsidiary of Chevron. Given the value of Hess’s Stabroek interest, the merger was subject to intense scrutiny.
Exxon and CNOOC initiated arbitration against Hess in March 2024, arguing that the merger triggered the JOA’s change of control provisions, thereby activating their ROFR over Hess’s Stabroek stake. We understand that the central question in the arbitration will have been over whether the ROFR was applicable to a change in control under the JOA, and if so, whether this gave Exxon and CNOOC a ROFR to acquire Hess’s interest before Chevron.
The dispute will have turned on the interpretation of the JOA’s change in control and ROFR provisions and the application of those provisions to the terms of the merger. While the exact wording is not public, Chevron and Hess argued that the merger did not trigger the ROFR, relying on the structure of the transaction and the language of the JOA. Exxon and CNOOC contended that the nature of the deal required the ROFR to be honoured.
The arbitral tribunal ultimately sided with Hess, finding that the ROFR did not apply to the merger as structured, in particular given that Chevron had bid for all of Hess and not just its stake in the joint venture. Accordingly, Chevron has now completed its acquisition of Hess.
Implications for JOA Parties: Time to Revisit Change in Control Clauses
The Hess–Exxon arbitration underscores the critical importance of clear and precise drafting in joint operating agreements, particularly regarding change in control and pre-emption rights.
While the specific language of the Stabroek JOA and the arbitral tribunal’s findings remain unknown, the dispute highlights that parties should ensure they understand the implications of any change of control or ROFR provisions in their existing contracts and ensure clear language is used in new JOAs under negotiation.
JOA parties should carefully review their change in control and ROFR provisions to ensure they operate as intended, taking into account evolving deal structures and the potential for indirect transfers of interests and parent company-level mergers.
The second article in the series will take an in-depth look at pre-emption rights and the transfer of participating interests, including their practical implications and offering guidance on how parties can navigate these issues in the context JOAs.
*Honor Soames is a trainee solicitor in the London office.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.
