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An arbitration panel could approve or block the $53 billion sale of Hess (New York Stock Exchange: HSSE) to Chevron (CVX) It remains incomplete Three months after the case was filed, delaying a decision on whether Exxon Mobil (XOM) would invest.Reuters reported on Thursday that the company has the right of first refusal regarding Hess' operations in Guyana.
The third and final arbitrator has not been appointed, according to the report, a delay that may mean that a decision will not be issued this year as HES expected. Each side in the dispute reportedly appoints one arbitrator and these two nominate the third.
“The market was hoping for a quick settlement of the arbitration process, but it never properly understood what Exxon was trying to achieve,” Mark Kelly, an analyst at MKB Advisors, told Reuters. “It is widely believed that Exxon did not even communicate this matter to Chevron or Hess.”
The Commission will consider allegations by Exxon (XOM) that Chevron (CVX) is attempting to circumvent the right of first refusal contained in the Guyana Oil Consortium's Joint Operating Agreement.
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The question of the right of first refusal generally “depends on the specific wording of the joint business agreement and on the value of the asset in relation to the larger change in control transaction,” according to Chris Strong, a partner and vice president at the law firm Vinson & Elkins. Model contracts of the International Association of Energy Negotiators.