Chevron to acquire rival US oil and gas company Noble Energy for $5bn

Chevron acquisition of Noble Energy : Chevron has signed all-stock deal worth $5 billion for acquiring rival US oil and gas company Noble Energy in a move to consolidate its position in the Eastern Mediterranean Sea.

Including debt, the total consideration for the acquisition is $13 billion.

Noble Energy is currently engaged in operating a portfolio of onshore assets in the US and offshore in the Eastern Mediterranean, which includes offshore assets in Israel, and also off the west coast of Africa.

According to Chevron, the acquisition of Noble Energy gives it low-cost, proven reserves and attractive undeveloped resources that will improve its already advantaged upstream portfolio. Besides, Noble Energy is expected to boost Chevron’s US unconventional position with de-risked acreage in the DJ Basin and 92,000 largely contiguous and adjacent acres located across the Permian Basin.

Commenting on Chevron acquisition of Noble Energy, Michael Wirth – Chevron Chairman and CEO said: “Our strong balance sheet and financial discipline gives us the flexibility to be a buyer of quality assets during these challenging times.

“This is a cost-effective opportunity for Chevron to acquire additional proved reserves and resources. Noble Energy’s multi-asset, high-quality portfolio will enhance geographic diversity, increase capital flexibility, and improve our ability to generate strong cash flow. These assets play to Chevron’s operational strengths, and the transaction underscores our commitment to capital discipline.”

Chevron acquisition of Noble Energy. Photo courtesy of Coolcaesar/Wikipedia.org.

As per the terms of the deal, Chevron will exchange 0.1191 of its shares for each share of Noble Energy. The deal values each share of the smaller US oil and gas company at $10.38.

David Stover – Noble Energy Chairman and CEO, commenting on Chevron acquisition of Noble Energy, said: “The combination with Chevron is a compelling opportunity to join an admired global, diversified energy leader with a top-tier balance sheet and strong shareholder returns.

“Over the last few years, we have made significant progress executing our strategic objectives, including driving capital efficiency gains onshore, advancing our offshore conventional gas developments and significantly reducing our cost structure. As we looked to build on this positive momentum, the Noble Energy Board of Directors and management team conducted a thorough process and concluded that this transaction is the best way to maximize value for all Noble Energy shareholders.”

Closing of the Chevron acquisition of Noble Energy is likely to occur in Q4 2020 and is subject to the latter’s shareholder approval along with receipt of regulatory approvals and meeting of other customary closing conditions.