A proxy vote related to the proposed merger between Chevron Corp. and Hess Corp. is coming up on May 28, and Hess’ position offshore Guyana has shareholders split.

Chevron’s $53 billion all-stock offer for Hess will allow Chevron to add assets in the U.S. Gulf of Mexico, offshore Southeast Asia and in the Bakken. But Hess’ 30% interest offshore Guyana in the prolific Stabroek Block is arguably the most important asset.

Hess’ Stabroek interest has spurred a spat between Chevron and the block’s operators Exxon Mobil Corp. and China National Offshore Oil Corp. (CNOOC). Exxon Mobil owns 45% interest in Stabroek, while CNOOC owns 25% interest, and both claim they have a right of first refusal (ROFR) to Hess’ 30% interest.

There are notable reasons Exxon and CNOOC are willing to fight for their ROFR.

In Stabroek, the Exxon-led consortium has found slightly over 11 Bboe of resources, potentially enough to underpin up to 10 FPSOs, according to Exxon and Hess. And Exxon Mobil expects gross production in Stabroek to reach 1.3 MMbbl/d by 2027 using just six FPSOs.

Considering arbitration-related delays, Chevron’s deal with Hess could close in 2025, David Deckelbaum, TD Cowen managing director, wrote in a commentary in April.

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Divided lines: yes, no, maybe?

Most recently, Hess shareholders have been urged by Glass, Lewis & Co., an independent proxy voting and corporate governance advisory, to vote for the merger with Chevron.

In a report to shareholders, Glass, Lewis & Co. said “the strategic and financial merits of the proposed merger are sound and reasonable.”

Glass, Lewis & Co. also advised shareholders that the merger was an opportunity to participate in any future upside to come from the combined companies.

“We strongly believe that voting for the all-stock Chevron transaction now is the best, most accretive value option for our shareholders and look forward to the successful completion of our merger,” Glass, Lewis said in the report, citing Hess CEO John Hess.

Hess shareholders are expected to benefit from increased cash returns—nearly nine times the current level—including dividends and share repurchases upon the transaction’s closing, Hess said in the release.

“The proposed all-stock deal allows current Hess shareholders to continue to participate in the upside of Chevron’s free cash flow growth,” Hess said.

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But on the opposite side of the fence, larger Hess shareholders have warned they plan to abstain from voting.

New York-based investment firm D.E. Shaw & Co., the 14th-largest shareholder in Hess, plans to abstain from voting, Bloomberg reported on May 20. The main reason is to wait out more clarity around the arbitration cases. HBK Capital Management, Hess’ fifth-largest investor, is in agreement with D.E. Shaw, according to the news agency.

Institutional Shareholder Services Inc. also advised investors to not support the deal and instead vote for a delay, Bloomberg said in the report.

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