Hess shareholders to vote on Chevron deal as dispute with Exxon over Guyana assets creates uncertainty

Hess shareholders will vote Tuesday on the New York-headquartered oil company's pending acquisition by Chevron for $53 billion, as the timeline for when the deal may close has become increasingly murky as the companies are locked in a dispute with Exxon Mobil.

The pending deal is in jeopardy as Exxon Mobil claims a right of first refusal over Hess' assets in Guyana under a joint operating agreement that governs a massive offshore oil patch called the Stabroek Block.

Hess has a 30% stake in the Stabroek Block, while Exxon leads the development with a 45% stake. China National Offshore Oil Corporation holds the remaining 25% in the oil patch.

Exxon filed for arbitration in March to defend the rights it claims under the joint operating agreement. Chevron and Hess have told investors that the pending deal would terminate if Exxon prevails in the dispute.

Institutional Shareholder Services called for Hess shareholders to abstain from the vote on the merger agreement to allow for more details to emerge on how long the arbitration process will take.

ISS said Chevron and Hess did not promptly notify shareholders of the risk posed by the joint operating agreement, waiting months after the deal was announced. Hess shareholders would bear the risk if the deal terminates because Chevron is not obligated to pay a termination fee, according to ISS.

Shareholders would also not be entitled to Chevron's dividend during the arbitration process, according to ISS. The dividend was touted by Hess as one of the main benefits of the deal, according to ISS.

Glass Lewis, on the other hand, recommended that shareholders vote in favor of the deal. The firm acknowledged that the dispute with Exxon has created uncertainty, but said "the strategic and