Chevron to Acquire Noble Energy in All-Stock Mega Deal
Chevron Corp. has entered into a definitive agreement to acquire 100% of the issued share capital of Houston-based E&P company Noble Energy Inc. in an all-stock corporate transaction valued at approximately US$13.0 billion on an enterprise value basis.
The deal marks the largest corporate M&A transaction announced since Occidental Petroleum Corp.’s US$55 billion acquisition of Anadarko Petroleum Corp. last year. In April 2019, Chevron had attempted to acquire Anadarko, before being outbid by Occidental.
Under the terms of the agreement, Noble shareholders will receive 0.1191 Chevron shares for each share held, valuing the offer at US$10.38 per share based on Chevron’s closing share price on July 17th (the last trading day prior to the announcement of the deal). Adjusting for Noble’s existing net debt of approximately US$8 billion, the total implied transaction value is approximately US$13 billion. Upon completion, Noble shareholders will hold 58 million shares of Chevron stock, representing a ~3% stake in the combined entity.
The low-cost acquisition of Noble’s proved reserves will fit strategically into Chevron’s plans in the U.S. shale patch and abroad. The deal is expected to boost Chevron’s portfolio of assets in the Permian, DJ, and Eagle Ford basins, as well as diversify Chevron’s portfolio with large-scale producing assets in the Eastern Mediterranean.
NASDAQ-listed Noble is engaged in upstream operations across the DJ Basin, Permian, Eagle Ford Shale and U.S. Gulf of Mexico. In addition, the company has international interests in offshore projects in West Africa (Cameroon, Gabon) and the Eastern Mediterranean (Cyprus, Israel). Noble reported proven reserves of 2,050 million barrels of oil equivalent as of as of 31-Dec-2019, of which ~66% was gas and ~73% was in the proved developed category.
“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,” said Chevron’s Chairman & 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,” said David Stover, Noble’s Chairman & CEO.
The transaction has been unanimously approved by both Chevron and Noble’s boards, and is expected to close in Q4-2020, subject to shareholder and regulatory approvals, and other customary closing conditions.
Credit Suisse is acting as exclusive financial advisor to Chevron on the deal, while JP Morgan is acting as financial advisor to Noble.