Chevron Nears $5 Billion Takeover of Noble Energy
By Cara Lombardo
Chevron Corp. is close to a deal to buy Noble Energy Inc. for
about $5 billion, in what would be the largest oil-patch tie-up
since the coronavirus pandemic delivered a shock to the
The all-stock takeover values Noble at $10.38 a share or 0.1191
Chevron share, according to a person familiar with the matter. That
would represent a roughly 7.6% premium over Noble's Friday closing
price of $9.65 and nearly 12% based on a 10-day average. Including
Noble's hefty debt load, the deal would be valued at roughly $13
Noble, based in Houston, is an independent oil-and-gas producer
with U.S. and international operations. Buying the company would
expand Chevron's presence in the DJ Basin of Colorado and Permian
Basin, which spans West Texas and New Mexico. It would also give
San Ramon, Calif.-based Chevron, which has a market value of $163
billion, assets in the eastern Mediterranean and West Africa and
yield potential annual cost savings of $300 million, the person
It would be one of the first signs of life in energy-sector
deal-making since oil prices plummeted in March as a result of
widespread shutdowns and travel bans. Futures contracts for West
Texas Intermediate--the U.S. bellwether--briefly entered negative
territory in April. While prices have partly recovered and stand at
about $40.47 a barrel, the sudden crash sent several energy
companies spiraling downward.
More than 20 North American oil producers have filed for
bankruptcy this year, according to law firm Haynes & Boone LLP,
and dozens more are expected to follow suit if oil prices stay
around current levels.
Small and midsize oil-and-gas companies have performed poorly in
recent years and faced investor pressure to slow growth and deliver
more consistent profits and cash flow. That has fed expectations of
a potential wave of mergers as stronger players snap up weaker
Noble is Chevron's first big strategic move after walking away
from a high-profile bidding war for Anadarko Petroleum Corp. last
year. Chevron was outbid by Occidental Petroleum Corp., which paid
roughly $38 billion for Anadarko with help from Warren Buffett.
Occidental has been languishing under a roughly $40 billion debt
load, which it has been taking steps to lessen.
The two rivals had coveted Anadarko's assets in the heart of the
oil-rich Permian. After Occidental's offer was deemed superior,
Chevron Chief Executive Mike Wirth said his company opted to accept
the $1 billion termination fee rather than make a higher offer,
citing a focus on discipline.
Major oil companies have been eyeing increased acreage in the
Permian, partly because its geology makes it one of the least
expensive places in the U.S. to produce oil via fracking.
Production in the area was booming and helped lift U.S. crude
production to record levels before the pandemic shriveled global
demand for oil by more than 20% this spring.
Christopher M. Matthews contributed to this article.
Write to Cara Lombardo at email@example.com
(END) Dow Jones Newswires
July 20, 2020 06:14 ET (10:14 GMT)
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