San Ramon, Calif.-based Chevron increased its presence in Permian Basin and Denver-Julesburg Basin in Colorado with its acquisition of Houston-based Noble Energy. Chevron said July 20 the all-stock transaction is valued at $5 billion ($10.38 per share). Total enterprise value, including debt, is $13 billion. It will increase Chevron’s proved reserves by about 18 percent compared with yearend 2019. Noble Energy produced 18.6 million barrels of crude oil and 46.7 billion cubic feet of natural gas and filed for 76 drilling permits last year. Noble’s assets in Israel, west Africa and Eagle Ford in south Texas also are included.
Chevron chairman and CEO Michael Wirth said, “Our strong balance sheet and financial discipline give 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.”
Houston Chronicle said it’s “the first major consolidation since oil markets crashed and left struggling companies vulnerable to takeover… The bust will leave the industry smaller, swallowing up smaller companies through acquisitions and bankruptcies and making the strongest companies even stronger.”
RS Energy Group offered a somewhat different approach: “The transaction is not a harbinger of much-needed industry consolidation, in our view, because Noble owns a unique portfolio of assets that generate cash now. Any savings from synergies, currently pegged by Chevron at $300 million annually, are icing on the cake.”
Noble’s Permian Basin assets acquired by Chevron are located in 92,000 largely contiguous and adjacent acres. Closing is expected in 2020Q4.