Chevron announced on Thursday that it expects a third-quarter loss ranging between $200 million and $400 million as a result of its $55 billion acquisition of Hess. The deal, finalized in July, followed a protracted legal battle with rival Exxon Mobil, which sought to block Chevron’s entry into Guyana’s offshore oil basin. By securing Hess, Chevron gained access to what is considered the world’s largest oil discovery in decades, but the integration process has brought significant near-term financial costs that are now weighing on the company’s quarterly outlook.

The energy giant emphasized that excluding severance expenses and other charges tied to the transaction, the impact on adjusted earnings should be between $50 million and $150 million. While investors had anticipated some financial drag, the scale of the costs highlights the short-term challenges associated with merging operations at such a large scale. Analysts say the deal is expected to pay off in the long term, with Guyana’s oilfields set to become one of Chevron’s most important production hubs over the next decade.

Looking ahead, Chevron said it expects net oil-equivalent production for the third quarter to fall between 450,000 and 500,000 barrels per day. This forecast includes some downtime linked to integrating Hess’s production assets, though executives stress that the broader trajectory points to steady growth. The production estimates are closely watched by markets, given that Guyana’s offshore reserves are expected to yield billions of barrels of oil over the next 20 years, fundamentally reshaping Chevron’s output mix.

Capital spending for the quarter is projected to range from $1 billion to $1.25 billion, with a focus on upstream investments. Much of this spending will support projects in Guyana and the Permian Basin, regions seen as critical pillars of Chevron’s growth strategy. The company also indicated that integration costs are likely to continue into future quarters, but said it is committed to maintaining disciplined investment while balancing shareholder returns through dividends and buybacks.

Despite the immediate financial strain, Chevron maintains that the Hess acquisition is a strategic victory, providing it with a foothold in one of the fastest-growing oil regions in the world. The transaction strengthens its hand against Exxon Mobil, which already operates extensively in Guyana. Industry observers argue that while Chevron’s profits will take a short-term hit, the long-term payoff from access to low-cost, high-quality reserves could be transformational, reinforcing its position among the world’s top energy producers.

Source: Reuters.