Chevron Corporation (CVX) To Buy Noble Energy (NBL) For $5 Billion

By Amit Chowdhry ● July 20, 2020
  • Chevron Corporation (NYSE: CVX) announced it has agreed to buy Noble Energy, Inc. (NASDAQ: NBL) for about $5 billion in an all-stock transaction

Chevron Corporation (NYSE: CVX) announced it has agreed to buy Noble Energy, Inc. (NASDAQ: NBL) for about $5 billion in an all-stock transaction. This deal values Noble at $10.38 per share (0.1191 of a Chevron share). That amount is equivalent to a 7.5% premium of the closing price on Friday. And the total enterprise value of the deal including debt is $13 billion.

The deal has been approved by the boards of both companies and it is expected to close in the fourth quarter, following regulatory approvals.

The acquisition of Noble Energy is providing Chevron with low-cost proved reserves and undeveloped resources that will enhance an already advantaged upstream portfolio. And Noble Energy brings low-capital and cash-generating offshore assets in Israel thus strengthening Chevron’s position in the Eastern Mediterranean. Plus Noble Energy also enhances Chevron’s leading U.S. unconventional position with de-risked acreage in the DJ Basin and 92,000 largely contiguous and adjacent acres in the Permian Basin.

Based on Noble Energy’s proved reserves at year-end 2019, this will add approximately 18% to Chevron’s year-end 2019 proved oil and gas reserves at an average acquisition cost of less than $5/boe and nearly 7 billion barrels of risked resource for less than $1.50/boe.

The deal is expected to achieve run-rate operating and other cost synergies of $300 million before-tax within a year of closing.

Key Quotes:

“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. We look forward to welcoming the Noble Energy team and shareholders to bring together the best of our organizations.”

“This combination is expected to unlock value for shareholders, generating anticipated annual run-rate cost synergies of approximately $300 million before tax, and it is expected to be accretive to free cash flow, earnings, and book returns one year after close.”

— Chevron Chairman and CEO Michael Wirth

“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. We look forward to bringing together our highly complementary cultures and teams to realize the long-term value and benefits that this combination will deliver.”

— Noble Energy’s Chairman and CEO David Stover