October 2023 was a big month for oil and gas shake-ups. ExxonMobil (XOM -0.33%) announced an all-stock merger with exploration and production (E&P) company Pioneer Natural Resources. Chevron (CVX -0.63%) followed suit with a similar-size deal to buy E&P Hess.
ExxonMobil completed its acquisition in May 2024, but it wasn't until July 18, 2025, that Chevron finally announced it had acquired Hess.
Here's why Chevron's deal was delayed, what it means for the investment thesis, and which dividend-paying energy stock is the better buy now.
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From adversaries to partners
The most valuable aspect of Hess' business is its 30% stake in the Stabroek Block in offshore Guyana. The other holders are ExxonMobil, with a 45% interest, and Chinese state-owned CNOOC with a 25% stake.
ExxonMobil has been exploring reserves in offshore Guyana since 2008. In 2015, it achieved its first exploration well. Since then, it and the rest of the consortium have ramped up their production -- reaching 500 million barrels of total oil produced from the Stabroek Block in November 2024. The consortium plans to grow production to 1.3 million barrels per day by the end of 2027.
For context, ExxonMobil produced 4.55 million barrels of oil equivalent per day in the first quarter of 2025. Needless to say, Guyana has become one of the company's top producing regions. In fact, it identified Guyana as one of its "advantaged assets," which are high-margin investment opportunities.
Other advantaged assets include the company's onshore exposure in the Permian Basin in Texas and its liquefied natural gas (LNG) portfolio. ExxonMobil plans to have 60% of its production come from the Permian, Guyana, and LNG by 2030.
Given that it had the largest stake in the Stabroek Block, it was in ExxonMobil's best interest to prevent arguably its largest competitor from joining the consortium. It engaged in a lengthy dispute with Chevron, contending that the deal triggered a change-of-control clause. The ruling went in favor of Chevron, and the deal moved forward.
Although ExxonMobil would probably have preferred to partner with a pure-play E&P like Hess rather than a global integrated major like Chevron, the change of ownership won't directly harm ExxonMobil. And Chevron's backing could help the consortium develop the block even faster. As for Chevron, the company gains access to one of the most valuable offshore plays in the world -- rich in reserves with decades of development potential at a low cost of production.
The cash cow playbook
The oil and gas industry experienced a significant downturn in 2014 and 2015. It took years to recover, and then the industry entered yet another downturn in 2020 due to the pandemic. Investors were not happy, and ExxonMobil's and Chevron's stock prices hit multiyear lows, and the companies reported billions in losses that year.
To regain investor confidence, ExxonMobil and Chevron have focused on improving the quality of their production assets. A combination of technological advancements, efficiency improvements, and doubling down on regions with geographic advantages has enabled both companies to reduce their break-even levels, allowing them to generate positive free cash flow even at relatively low oil and gas prices. This advantage aids in forecasting multiyear capital allocation strategies -- including operating expenses, capital expenditures, buybacks, and dividends -- as well as expanding low-carbon investments.
ExxonMobil and Chevron have become much stronger and balanced companies over the years. The former's corporate plan through 2030 forecasts a break-even Brent crude price per barrel of just $30 by 2030 and $165 billion in cumulative surplus operating cash flow even if Brent prices average just $65 per barrel.
Chevron has an even lower breakeven than ExxonMobil, estimated in the low $30 Brent range by consulting firm Wood Mackenzie. The integration of Hess and development of reserves in offshore Guyana should help Chevron grow its production while maintaining a low cost of production.
Two quality dividend stocks at attractive valuations
Having a low cost of production allows ExxonMobil to support its growing dividends at lower oil and gas prices, generating substantial excess cash flow even at mid-cycle prices to repurchase stock and invest in new projects.
ExxonMobil has increased its dividend for 42 consecutive years and yields 3.6%, while Chevron has a 38-year streak and yields 4.5%. With both companies expecting steady long-term earnings growth, ExxonMobil's 14.6 price-to-earnings ratio (P/E) and Chevron's 17.4 P/E seem like bargains.
Add it all up, and ExxonMobil and Chevron are both great buys now for value investors looking to boost their passive income.
