Chevron and Hess: Did the Forecast Hold Up?

01 | The Price

Chevron paid the top of Hess's range

$171 sat at the top of Goldman's cash-flow values.

The deal

Chevron agreed on 22 October 2023 to buy Hess for 1.025 Chevron shares per Hess share, $171.00 at signing and a 4.9% premium to Hess's last close. It closed on 18 July 2025, 634 days after announcement, after a favorable arbitration outcome on the right of first refusal over Hess's 30% stake in Guyana's Stabroek block.

The price check

Goldman Sachs valued Hess at $135 to $172 on discounted cash flow and $129 to $171 on the present value of a future share price. The price sat 97% and 100% of the way up those ranges. Past oil-and-gas takeover premiums gave $148 to $181.

The negotiation

Chevron opened on 2 October at one share for one, a 10.2% premium. By 17 October the premium had shrunk to 2.2% as the share prices moved, and Hess asked for more. The final 1.025 ratio was agreed on 20 October. Hess's board decided not to approach other buyers.

02 | The Forecast

What Hess's plan promised

Production up 68% and cash flow up 2.5 times by 2028.

The plan

Hess management gave Goldman and Chevron a 2023-2028 plan on 15 October 2023, updated on 18 October. It had production rising from 389 to 655 thousand barrels of oil equivalent a day, and operating cash flow from $3.9bn to $9.8bn.

The price deck

The plan assumed Brent at $85 in 2023, $83 in 2024 and $75 a barrel from 2025, with WTI at $80, $80 and $72.

How much rode on it

Goldman's DCF discounted the plan's unlevered free cash flow to 2028 and valued the rest at 6.0 to 7.0 times 2028 EBITDAX, so the later years and the terminal value likely carry most of the value. The proxy does not give the split.

One measure can't be tested

The plan's E&P adjusted EBITDAX is a non-GAAP figure Hess does not report in its earnings releases or 10-Ks, so it is left out of the test.

03 | Forecast Vs Actual

Volumes hit plan; cash flow did not

Production within 1.3%; 2024 cash flow 14% short, spending 20-25% over.

Production

Hess produced 394 thousand barrels of oil equivalent a day in 2023 and 481 in 2024, within 1.3% of plan both years. Guyana accounted for most of the increase, rising from 115 to 186 thousand barrels a day.

Cash flow

Operating cash flow matched the plan in 2023 at $3.9bn but was $5.6bn in 2024, 13.6% below the $6.5bn planned. Working-capital outflows of $753m account for most of the $881m shortfall; before them, cash flow was $6.35bn, 2.0% short. The plan's own working-capital assumption is not disclosed.

Spending

E&P capital and exploratory spending was $4.2bn in 2023 and $4.9bn in 2024, 7% and 25% above the plan's E&P capital expenditures. The plan does not define that line; Hess's reported figure includes about $145m a year of expensed exploration, and Hess's own January 2024 guidance was already $4.2bn. On a cash-additions basis the 2024 overrun was 19%.

Caveat

2023 was mostly known when the plan was set in October. The plan's cash flow appears to include working capital: the 18 October update adjusted it, and 2023 matches the reported figure. So reported operating cash flow is the main test; the pre-working-capital line is for reference.

04 | Why The Gap

Prices, working capital and spending

Working capital, not volume, explains most of the 2024 miss.

Prices

The plan's 2024 deck had Brent at $83 and WTI at $80. Hess realized $77.28 a barrel for its crude before hedging. Realized prices are not benchmarks, since they reflect crude quality and location. Hess also realized less than the 2023 deck, yet 2023 cash flow matched plan, so price alone is a weak explanation.

Spending

E&P spending ran above plan as Guyana development continued. The plan had it roughly flat from 2023 to 2024; it rose 16%.

What held

Volumes held. The operating-cash-flow miss was mostly working capital, with realized prices below the deck; higher spending cut the cash left after investment. The proxy does not show how sensitive Goldman's values were to either.

05 | Scorecard

The plan's easy parts held

Volumes came true; cash after spending fell short.

Result

Hess delivered the barrels its plan promised through 2024. Operating cash flow was 14% short in 2024, mostly on working capital, and spending ran well above the plan's line, so cash left after investment fell short. With the price at the top of Goldman's DCF range, the test of the plan's value rests on years Hess never reported.

What can't be tested

Hess stopped reporting after the first quarter of 2025, so the plan's later years, which likely carry most of the value, fall inside Chevron's results.

For the database

Hess partly fits the pattern from the first three deals: near-year volumes held and the 2024 cash measure missed; its later years cannot be tested. Its forecast, actuals, Goldman ranges and deal terms are added to the database.