Chevron to Buy Us Energy Group Noble in $13 bn Deal


Reprinted from the FT – 20/07/2020

Tie-up expected to mark the starting point of a wave of energy sector M&A prompted by the oil crash. Chevron has agreed to acquire Noble Energy for $13bn, including debt, the first major energy industry deal since oil prices collapsed earlier this year amid geopolitical turmoil and the coronavirus pandemic. Under the terms of the all-share tie-up, Noble Energy shareholders will receive 0.1191 shares of Chevron, for each of their shares at a $10.38 per share valuation.

The deal could be the first in a wave of M&A in the oil and gas sector as stronger players such as Chevron and Exxon are well-positioned to buy explorers that have seen their valuation plummet over the past year.

Noble’s acquisition fits with Chevron’s strategic plans to focus on the international natural gas business and US shale production. Noble led the development of Israel’s Leviathan gas field, a huge offshore development, and holds a string of upstream assets in Africa and elsewhere. It also has a presence in the Permian shale, the world’s most prolific oilfield, where Chevron has also amassed a large position. Noble’s debt amounts to almost $9bn against assets currently valued at just over $17bn, according to S&P Capital IQ.

“Our strong balance sheet and financial discipline give us the flexibility to be a buyer of quality assets during these challenging times,” said Chevron chairman and chief executive Michael Wirth. “This is a cost-effective opportunity for Chevron to acquire additional proved reserves and resources.” Mr. Wirth said in an interview with the FT in May Chevron had an appetite for acquisitions, saying that the group was “alert to opportunities” that had emerged because of the oil price crash.

Last year, the company pulled out of a bidding war against Occidental Petroleum to buy Anadarko, another company that like Noble had both international natural gas assets and a presence in the US shale sector.