Exxon Mobil's (XOM.N) $59.5 billion deal to acquire oil and gas producer Pioneer Natural Resources (PXD.N) may have been larger than Chevron's (CVX.N) $53 billion agreement to buy Hess (HES.N), but it is Chevron that is paying a loftier price tag.
Pioneer generates twice as much annual cash as Hess, but the all-stock transactions value Pioneer at just 6.35 times its 12-month cash flow compared with 11.65 times for Hess.
This means Chevron is paying close to double the price for every dollar of acquired cash flow compared with Exxon.
The discrepancy shows how Chevron values Hess' production prospects more highly than Exxon values Pioneer's.
Pioneer derives all its revenue from the U.S., specifically the country's biggest oilfield, the Permian shale basin in West Texas and eastern New Mexico, which currently has the most lucrative acreage but whose reserves are slowly dwindling.
Hess, on the other hand, derives close to a quarter of its revenue from oil hot-spot Guyana, where low-cost offshore production from its Stabroek block continues to rise.
Chevron is not present in Guyana and was keen to establish a foothold to catch up with Exxon, which is already the top producer in the South American country.
