This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
For about twenty-one months, the largest pending deal in the oil patch — Chevron’s roughly $53 billion acquisition of Hess, signed in October 2023 — sat hostage to a single clause in a contract almost nobody outside the industry had read. The clause was a right of first refusal in the joint operating agreement governing the Stabroek block off Guyana, where Hess held a 30% interest alongside ExxonMobil’s 45% and CNOOC’s 25%. Exxon and CNOOC said the ROFR gave them first crack at Hess’s interest before it could change hands. Chevron and Hess said nothing was changing hands — Chevron wasn’t buying the Stabroek interest, it was buying the company that owned it, top-side, in a corporate merger. An arbitration tribunal in Paris ultimately agreed with Chevron, and on July 18, 2025, within hours of the publicly reported ruling, the merger closed; Chevron’s Form 8-K filed that day shows the structure that did the work — a Chevron merger subsidiary merged into Hess, with Hess surviving as a wholly owned Chevron subsidiary.
The award itself is confidential, so the doctrine has to be read from the outcome. But the outcome tells a story deal lawyers have watched play out at every scale: a preferential right drafted around asset transfers met a transaction structured as a parent-level merger, and the structure won. If you negotiate joint ventures, shareholder agreements, or operating agreements — at $53 billion or at $5 million — the lesson lands the same way.
A ROFR only catches what its trigger describes
A right of first refusal is a creature of its trigger language. The classic formulation activates when a party proposes to sell, assign, or transfer the covered asset or interest. Courts and tribunals, across jurisdictions, tend to read those triggers with a narrow literalism that surprises the businesspeople who negotiated them — preferential rights restrain alienation, the reasoning goes, so ambiguity resolves against the restraint. The recurring gap is exactly the one Stabroek exposed: when the owner of the covered interest doesn’t sell the interest but instead is itself acquired, has anything been sold, assigned, or transferred? The interest still sits in the same entity. The entity has a new parent. If the trigger speaks only of transfers of the interest, the change of control upstairs is — on the plain words — none of the ROFR holder’s business.
Structure choices sharpen the point. In a reverse triangular merger, the acquirer’s shell merges into the target and the target survives, meaning the target’s contracts, licenses, and JV interests never move at all; that is precisely the structure the Chevron 8-K describes, and it is the structure Delaware blessed in the Meso Scale litigation as not constituting an assignment even “by operation of law” — analysis I’ve walked through in the post on anti-assignment clauses and reverse triangular mergers. The same logic that saves a customer contract from an anti-assignment clause saves a JV interest from an asset-trigger ROFR. Buyers pick these structures for exactly this reason, and there is nothing sharp about it: the counterparty got the protection it drafted, measured by what it drafted.
If you want a ROFR to reach a change of control, you have to write it that way
The drafting response is not complicated; it is just deliberate. First, the trigger has to name the indirect event: a transfer includes any direct or indirect transfer of the interest, including any transaction — merger, consolidation, share exchange, equity sale, or otherwise — that results in a change of control of the party holding it. Every operative word matters. Indirect. Change of control, itself defined by voting power or the ability to direct management, not just share counts. A catchall for structures nobody has invented yet. Sophisticated oil-and-gas JOAs often do contain change-of-control language, and the public commentary around Stabroek suggests the fight there was over what the particular package of words reached — which is the second lesson: a change-of-control clause that has never been pressure-tested against a whole-company merger may not survive one.
Second, the valuation mechanics have to work for the trigger you wrote, and this is where change-of-control ROFRs get genuinely hard. A classic ROFR matches a third-party offer for the covered asset. But when the trigger is a parent-level merger, there is no standalone offer for the asset to match — the Stabroek interest was one piece of a $53 billion package priced as a whole. A workable clause needs a package-deal mechanic: an allocation procedure, an appraisal fallback with named methodology, and timelines that don’t let the rightholder freeze the larger transaction while the parties argue. A ROFR that catches mergers but prices by matching offers is a litigation-generation device. Some agreements solve this honestly by converting the right into a right of first offer or a put/call at appraised value on a change of control, which trades leverage for administrability.
Third, everyone should ask the exit question at signing: what does this right do to a future sale of my whole company? A founder granting a ROFR over a key contract or JV stake to a strategic partner may be granting, in substance, a veto over her own eventual exit — because acquirers price delay, and a rightholder with a colorable claim and an arbitration clause can manufacture twenty-one months of it even when it ultimately loses. That is the quiet second holding of the Chevron-Hess saga: the ROFR failed, and it still cost the buyer nearly two years of closing risk, financing carry, and interloper exposure. In a private deal, few sellers survive that timeline.
The same fight arrives in Florida deals wearing smaller clothes
None of this is confined to offshore blocks. Preferential rights riddle ordinary private-company documents: shareholder agreements with ROFRs on share transfers, LLC operating agreements gating “transfers” of membership interests, franchise and dealer agreements, commercial leases, and Florida statutory schemes that impose purchase rights of their own — the mobile home park regime I covered in the post on Florida’s park-resident right of first refusal being a pointed example. And the structural half of the lesson cuts in every direction: whether a Florida deal proceeds as an asset sale, an equity sale, a merger, or a statutory share exchange changes which consents, triggers, and preferential rights wake up. Diligence should read every ROFR-bearing document twice — once asking whether this deal triggers it, and once asking whether an argument exists that it does, because the argument alone has settlement value once a closing date is at stake.
The summary fits on an index card. Rights of first refusal reach what their words reach. Corporate structure can lawfully route around asset-level triggers, and tribunals will let it. If you hold the right, draft for indirection and price the package case. If you granted the right, know exactly what it catches before you plan an exit. And if you are relying on winning the argument later, remember that Chevron won — after twenty-one months.
If you are negotiating a joint venture, shareholder agreement, or a sale where a right of first refusal might reach the exit, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
