Daily Management Review

Chevron buys Noble Energy for $ 5B


Chevron Corp, one of the largest US oil companies, has reached an agreement to acquire rival Noble Energy Inc. for $ 5 billion, according to a joint press release between the companies.

Alf van Beem
Alf van Beem
This will mark the largest oil industry deal since the start of the coronavirus pandemic, The Wall Street Journal notes.

Under the terms of the agreement, Noble Energy shareholders will receive 0.1191 Chevron shares for each security they hold. Based on quotes for the close of the market on Friday, this offer values Noble Energy at $ 10.38, which represents a premium of about 7.6%. Taking into account the debt of Noble Energy, the deal is estimated at $ 13 billion.

After the closing of the deal, Noble Energy shareholders will own about 3% of the combined company.

"Our strong balance sheet and financial discipline give us the flexibility to buy quality assets during these challenging times," said Chevron CEO Michael Wirth. "This is a cost-effective opportunity for Chevron to acquire additional proven reserves and resources."

The acquisition of Noble Energy will expand Chevron's presence in the Permian Basin. It will also increase the company's proven oil and gas reserves by about 18% based on data at the end of 2019.

The deal was unanimously approved by the boards of directors of both companies and is expected to be completed in the fourth quarter of 2020.

Noble Energy shares jumped more than 12% during Monday's preliminary trading. Chevron shares change slightly.

source: bloomberg.com