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Exxon Mobil (NYSE:XOM) +1.5% in Wednesday’s trading after confirming at a Morgan Stanley conference that it has filed for arbitration to protect preemption rights related to Chevron’s (CVX) $53B deal to buy Hess (HES); Chevron trades roughly flat, Hess -1.4%.
Exxon (XOM) does not control whether the deal happens but if it does, the company plans to exert all preemption rights to provide the opportunity to look at the value, which it could then match if it chooses, Senior VP Neil Chapman told the conference.
“We’re extremely confident in our position that preemption rights exist in this contract, and we fully intend on ensuring that we preserve those preemption rights,” Chapman said. “Actually as of this morning, we filed for arbitration. We filed for arbitration to protect those preemption rights, and we think that’s very important for the company [and] very important for the industry. We think it’s precedent-setting, and sanctity of contracts in this industry is a really, really important component.”
Referring to the original joint operating agreement, “We understand the intent of this language of the whole contract because we wrote it,” Chapman said, adding the Chevron-Hess transaction “attempted to circumvent the commercial purpose” of the contract.
Chapman also reiterated Exxon’s (XOM) guidance that its planned $59.5B purchase of Pioneer Natural Resources can close in Q2.
