oil industry

Chevron to buy Noble Energy for $5 billion

Agence France-Presse, Agence France-Presse
Chevron to buy Noble Energy for $5 billion

Image from Noble Energy website

This is the biggest petroleum acquisition since the coronavirus pandemic caused oil prices to plummet

Chevron said on Monday, July 20, it had agreed to buy United States exploration and production company Noble Energy for $5 billion, the biggest petroleum acquisition since the industry downturn due to the coronavirus.

The deal will add about 18% to Chevron’s total reserves and bring it new acreage Colorado and Wyoming’s DJ Basin and the shale-rich Permian Basin in Texas and New Mexico, as well as in Israel and Equatorial Guinea.

“Our strong balance sheet and financial discipline gives us the flexibility to be a buyer of quality assets during these challenging times,” said Chevron chief executive Mike Wirth.

“This is a cost-effective opportunity for Chevron to acquire additional proved reserves and resources.”

The California-based petroleum giant said the total enterprise value of the transaction is $13 billion, including debt.

The transaction is expected to close in the 4th quarter of 2020, Chevron said.

The deal follows an historic plunge in oil prices, with US futures slipping into negative territory in April amid a steep downturn in demand. 

Since then, oil prices have recovered somewhat, with US benchmark contract West Texas Intermediate now around $40 a barrel.

However, the downturn has stressed smaller producers, spawning Chapter 11 bankruptcy filings by Whiting Petroleum and Chesapeake Energy.

Noble Energy jumped 9.8% to $10.60 in pre-market trading, while Chevron slipped 0.2% to $87.03. – Rappler.com