Oct 23 Reuters Chevron said on Monday it agreed to buy Hess for 53 billion in stock, the second proposed megamerger among the biggest U.S. oil players after Exxon Mobil bid 60 billion for Pioneer Natural Resources earlier this month.

The proposed deal raises the competition between Chevron, the No. 2 U.S. oil and gas producer behind Exxon, and it will make it an unusual partner with its bigger rival in Guyana, as Hess, along with China39;s CNOOC, were working together to develop drilling in the nascent Latin American producer.

The deal also signals Chevron39;s plans to continue boosting investments in fossil fuels as oil demand remains strong and big producers use acquisitions to replenish their inventory after years of underinvestment.

Chevron has offered 1.025 of its shares for each Hess share held, or 171 per share, implying a premium of about 4.9 to the stock39;s last close. The total deal value is 60 billion, including debt.

Chevron39;s shares were trading 3 lower premarket. RBC analysts said they were surprised by the deal timing and had expected the company to bide its time after Exxon39;s mega deal for Pioneer.

Guyana has become a major oil producer following huge discoveries in recent years, turning it into one of Latin America39;s most prominent producers, only surpassed by Brazil and Mexico.

Exxon and partners Hess and China39;s CNOOC are the only active oil producers in the country. Their projects are expected to reach 1.2 million barrels per day of…