Big acquisitions are always risky, so it was hardly shocking to see that Chevron's (CVX 1.51%) $53 billion deal to buy Hess didn't go as smoothly as planned. However, the delays caused by Chevron's main U.S. competitor may have been a good thing. Here's why Chevron's delayed purchase of Hess was close to the perfect outcome.
Chevron's timing matters
Chevron announced its agreement to buy Hess on Oct. 23, 2023. Almost instantly, ExxonMobil (XOM 0.35%) threw down a yellow card, calling a foul because it had a business relationship with Hess. It all boiled down to legal language around a large and important joint project. If Exxon was correct, the joint project could have been excluded from the acquisition, effectively killing Chevron's deal.
Image source: Getty Images.
The dispute wound up in court, delaying the acquisition while the legal issues played out. In the end, Chevron won and closed its purchase of Hess on July 18, 2025. That's more than a year later, a delay that was viewed as a negative at the time. However, buying Hess dramatically increased Chevron's debt. While the company still remains financially strong, with a debt-to-equity ratio of 0.25x, that is notably above the 0.12x it was just a couple of years ago.
High oil prices provide Chevron with an opportunity
The most interesting piece of the puzzle here, however, is what has happened to oil prices in 2026. While nobody could have predicted the unfolding geopolitical conflict in the Middle East, it has had a predictable impact on oil prices. As with most energy producers, Chevron will see revenue and earnings benefits from high oil prices.
NYSE: CVX
Key Data Points
The extra cash flow from this period of high energy prices gives Chevron a window to focus on reducing its leverage. That's actually fairly normal for the company, as it leans on its balance sheet during periods of low energy prices to support its business and dividend through the weak patch. The dividend has been increased annually for more than a quarter-century, which should make the stock attractive to dividend lovers.
However, in the current situation, the delayed Hess deal could allow Chevron to benefit from the same dynamic in a slightly different manner. That actually makes the current oil price spike an even more timely opportunity.
Sometimes good things come out of bad things
If you own Chevron, you should be doubly pleased with the currently high oil price environment. High oil prices won't just lead to higher revenues and earnings; they could also lead to a material improvement in the business's financial strength. If you don't own Chevron but are considering investing in the energy patch, its lofty 3.8% yield could be a good option, given the unique deleveraging opportunity likely ahead.
