UBS Reaffirms Buy Rating on Hess (HES) Ahead of Pivotal Q2 Earnings

NEW YORK, NY – July 7, 2025 – UBS has reiterated its 'Buy' rating and a robust price target of $173 for Hess Corporation (NYSE: HES), as the energy company approaches its second-quarter 2025 earnings release. This upcoming report is particularly significant, as it could potentially mark Hess's final quarterly disclosure as an independent entity, contingent on the progression and outcome of its proposed merger with Chevron.

Strong Operational Performance and Merger Optimism Underpin UBS Stance

Analysts at UBS highlighted their expectations for Hess to continue demonstrating strong operational performance across its diverse asset portfolio. This positive outlook is further bolstered by recent investor engagements, particularly meetings held in London, which revealed a prevailing optimistic sentiment among both event-driven and fundamental investors. A key driver of this optimism is the increasing belief in a favorable arbitration ruling concerning the Chevron-Hess deal, a critical factor for the merger's completion.

Arbitration Ruling: The Immediate Catalyst for Hess Shares

UBS maintains its projection for the Chevron-Hess transaction to close in the third quarter of 2025. The firm identifies the impending arbitration decision as the most crucial near-term catalyst for Hess shares. According to UBS's analysis, the potential outcomes of this arbitration present a compelling 3:1 risk/reward skew, indicating a significantly higher upside potential compared to downside risk for investors.

Confidence in Strategic Merits and Asset Quality

UBS's continued bullish stance on Hess is rooted in its strong confidence in both the strategic merits of the Chevron-Hess merger and the inherent quality of Hess's underlying assets. The firm believes that the combination of these factors provides a solid foundation for its 'Buy' rating and price target, irrespective of the short-term market fluctuations. The successful integration of Hess's assets, particularly its stake in the lucrative Stabroek Block offshore Guyana, into Chevron's portfolio is seen as a value-accretive move that will benefit shareholders of the combined entity.

Q2 Earnings: A Precursor to Merger Completion

The upcoming Q2 2025 earnings report will offer investors a final look at Hess's performance as a standalone company. While operational results will be scrutinized, the primary focus will remain on any developments or indications regarding the arbitration process and the merger timeline. The report is expected to confirm the company's operational strength, reinforcing the rationale behind the acquisition by Chevron and the positive sentiment from analysts like UBS.

Investor Focus Points:

• Arbitration Outcome: The most critical factor influencing Hess's share price in the near term.
• Operational Performance: Continued strong results from Hess's asset base, particularly in Guyana.
• Merger Timeline: Confirmation or updates on the expected Q3 2025 transaction close.
• Investor Sentiment: Monitoring the prevailing optimism among institutional investors regarding the deal's success.

UBS's reiteration of its 'Buy' rating underscores a strong belief in the successful completion of the Chevron-Hess merger and the long-term value proposition of Hess's assets.