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Introduction: On July 20, Chevron, the second largest oil company in the United States, announced that it would acquire Nobel Energy, an oil and gas producer, for $5 billion through an all-stock form, including debt, with a total transaction value of $130.
billion dollars
.
Chevron said it has reached a definitive agreement with Noble Energy to acquire Noble Energy in an all-stock transaction at a valuation of about $5 billion, or $10.
38 per share
.
In 2019, Chevron tried to acquire Anadarko, but it backed down after the same bidder, Occidental Petroleum Corp, raised its offer, and this year Chevron took advantage of the market.
In a downturn, another acquisition was launched
.
The deal, worth only 7% of Chevron's own value, is far smaller than the $50 billion it needed to acquire Anadarko
.
Chevron CEO Mike Wirth spoke to CNBC on Monday about why Chevron chose to buy Noble Energy
Chevron said in the announcement: The acquisition of Nobel Energy provides Chevron with low-cost proven reserves and attractive untapped resources, which will enhance an already advantageous upstream portfolio
.
Oil and gas project assets operated and explored by Noble Energy around the world (Image: Nobel Energy)
"Our strong balance sheet and financial discipline give us the flexibility to acquire quality assets during these challenging times," said Michael Wirth, Chevron Chairman and Chief Executive Officer
.
David Stover, chairman and chief executive of Nobel Energy, said: "Over the past few years, we have made significant progress towards our strategic goals, including driving improvements in onshore capital efficiency and advancing maritime routines.
The development of natural gas, significantly reducing the cost structure
.
The benefits of trading
The benefits of tradingChevron said that one of the benefits of this transaction is that based on Nobel Energy's proven reserves at the end of 2019, at an average acquisition cost of less than $5 per barrel of oil equivalent, Chevron will have proven reserves at the end of 2019.
The oil and gas reserves increased by about 18%, and nearly 7 billion barrels of risk resources were obtained at prices below US$1.
5/boe of oil equivalent
.
Noble Energy's assets will enhance Chevron's portfolio in the U.
S.
onshore as well as internationally in Israel and West Africa
.
The transaction is expected to realize pre-tax cost synergies of $300 million within one year of closing
.
The acquisition consideration is 100% stock-structured, leveraging Chevron's attractive stock currency while maintaining a strong balance sheet
.
In total, Chevron will issue about 58 million shares after the transaction closes
.
Total enterprise value was $13 billion, including net debt and book value of non-controlling interests
.
Chevron Strategic Plan
Chevron Strategic PlanThe acquisition of an independent oil and gas producer is in line with Chevron's strategic plan to focus on international gas operations and U.
S.
shale oil production
.
Chevron has been looking to expand its domestic U.
S.
shale gas business, and the Noble Energy asset will expand Chevron's U.
S.
shale gas assets in Colorado and the Permian Basin
.
Drilling and profits have plummeted in the Permian Basin this year due to the outbreak, which hit demand and pushed crude prices to an average of $20 a barrel in April
.
Oil prices have rebounded recently, but markets are still in the doldrums, making many assets cheaper
.
Noble Energy's market value was about $12 billion seven months ago, and the company's shares have fallen more than 60 percent since the start of the year
.
Shares of Noble Energy rose 5.
7 percent to $10.
21 on Monday following news of the acquisition, while shares of Chevron fell 1 percent to $86.
18 on Monday
.
