Chevron’s pending acquisition of The Woodlands-based Anadarko for total transaction value of $50 billion increases Chevron’s Permian Basin output by about 50 percent, according to drillinginfo, and makes it the largest producer in the basin. Anadarko’s Delaware Basin acreage is in the heart of Chevron’s holdings in the basin, creating a 75-mile-wide corridor that allows for more efficient long-lateral development and operational efficiencies. The acreage is located in Loving, Reeves, Ward and Winkler counties and covers 240,000 net acres (590,000 gross). Production during 2018Q4 was 127,000 boed (59 percent oil, 20 percent NGL, 21 percent gas). In February Anadarko was operating 14 rigs U.S. onshore, including 9 in Delaware Basin. Anadarko’s U.S. onshore also includes Denver-Julesburg Basin, Powder River Basin and Greater Natural Buttes, and Anadarko operates in Gulf of Mexico, Mozambique, Algeria, Ghana, Canada, Colombia, Peru and South Africa. Drillinginfo said the acquisition “is the sixth largest oil and gas deal by enterprise value.” San Ramon, Calif.-based Chevron announced the deal April 12.
Chevron’s strategic rationale for the transaction is “expansion of its shale and tight oil resources, most notably in Permian Basin, the addition of complementary deepwater assets in Gulf of Mexico, and the addition of Anadarko’s world-class Mozambique LNG assets.” The acquisition boosts Chevron’s 2018Q4 production by 22 percent (701,000 boed) to pro-forma 3.78 million boed – close to that of rival international superpowers ExxonMobil (4.01 million boed) and Shell (3.79 million boed) and well above BP (2.63 million boed). Roy Martin of Wood Mackenzie said, “Chevron ought to be able to do more with the acreage than Anadarko, which lagged behind in terms of well productivity.” And Per Magnus Nysveen of Rystad Energy added, “We have always considered Anadarko as having the best positioned acreage in the sweetest spot of the Delaware Basin.”
The Wall Street Journal said the cash-and-stock deal “could set off a frenzy for oil patch mergers.” The Journal added, “Occidental Petroleum Corp., a company that is smaller than Chevron but has one of the largest footprints in the Permian Basin, also approached Anadarko. Occidental’s offer represented a slightly higher premium that Chevron’s… Senior Anadarko officials preferred the offer from Chevron because of its stronger financial position.”