Chevron (CVX 0.37%) is tanking up, announcing plans to buy Hess (HES 0.67%) in an all-stock deal valued at about $53 billion. Investors get nervous about the risks that come with big-ticket mergers and acquisitions (M&A), and they're sending Chevron shares down as much as 3% on Monday following the news.

Chevron is bulking up in the world's newest oil hotbed

Oil prices are on the rise, and relief from renewables will take time to make a dent. Major oil producers are reacting by expanding their reserves. Earlier this month, Exxon agreed to acquire Pioneer Natural Resources for $64.5 billion, and on Monday Chevron followed with its own major acquisition.

Terms of today's deal call for Chevron to pay 1.025 shares for every Hess share, and to assume about $7 billion in debt. In return, Chevron will gain access to new oil reserves discovered in Guyana, as well as shale assets in North Dakota.

"This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets," CEO Mike Wirth said in a statement. "Importantly, our two companies have similar values and cultures, with a focus on operating safely and with integrity, attracting and developing the best people, making positive contributions to our communities and delivering higher returns and lower carbon."

But the deal will require Chevron to issue about 317 million shares of its common stock, meaning each existing share will represent a smaller slice of the overall company.

Is Chevron a buy after its blockbuster oil deal?

Shares of Chevron are falling after the announcement, a reflection of both the dilution that comes with an all-share deal and the risk of a major merger. If all goes to plan, adding Hess looks like a good deal for Chevron, but with merger integrations, things often do not go to plan, and management can get distracted.

For long-term investors, the deal looks like a step in the right direction. A decade ago, these oil majors were viewed as declining assets as the world transitioned toward green energy. But that transition is complicated and will not occur overnight.

Chevron, in buying Hess, is positioning itself for a future where oil will still be very much in demand. That should benefit shareholders over time.