Chevron snaps up No­ble in first big deal since oil price slumped

The Daily Telegraph - Business - - Business - By Ed Clowes

CHEVRON has agreed to buy No­ble En­ergy for $13bn (£10.3bn) in the oil in­dus­try’s first big deal since the coro­n­avirus cri­sis sent the price of crude plum­met­ing.

The tie-up val­ues Houston-based oil and gas pro­ducer No­ble at about $5bn, ex­clud­ing an $8bn debt moun­tain.

The deal is ex­pected to broaden Chevron’s reach into a valu­able drilling re­gion span­ning West Texas and New Mex­ico, known as the Per­mian Basin.

Chevron said it would seek to slash costs by $300m a year following the all­stock ac­qui­si­tion.

Tom El­la­cott, of en­ergy con­sul­tant Wood Macken­zie, said: “This is the first large-scale cor­po­rate ac­qui­si­tion of this down­turn.”

The deal comes a year af­ter Chevron’s failed at­tempt to ac­quire ri­val Anadarko for $50bn. It lost out to Oc­ci­den­tal Petroleum, which has suf­fered this year un­der the weight of the debt it took on from that takeover. Mr El­la­cott said: “Al­though of a smaller scale, the ac­qui­si­tion of No­ble will go fur­ther in re­duc­ing the con­cen­tra­tion of Chevron’s up­stream port­fo­lio around core an­chor po­si­tions in the Per­mian, Aus­tralian LNG, Kaza­khstan and the US Gulf of Mex­ico.”

Chevron shares fell in New York following the an­nounce­ment. An­a­lysts had pre­dicted that Chevron was likely to use its fi­nan­cial fire­power to snap up smaller com­pa­nies dur­ing the cri­sis.

Anish Ka­pa­dia, head of Lon­don­based in­de­pen­dent oil and min­ing ad­vi­sory group Palissy Ad­vi­sors, said Chevron was mak­ing the most of its strong per­for­mance rel­a­tive to smaller US oil com­pa­nies. Some 20 North Amer­i­can oil pro­duc­ers have filed for bank­ruptcy this year ac­cord­ing to the law firm Haynes & Boone. Firms fo­cused on shale gas ex­trac­tion are not vi­able when oil prices are be­low $50, and the in­ter­na­tional bench­mark Brent crude is cur­rently worth around $43 a bar­rel.

Dozens more US pro­duc­ers are ex­pected to col­lapse if prices do not re­bound. The in­dus­try’s fragility was high­lighted yes­ter­day when former stock mar­ket dar­ling Hal­libur­ton posted crip­pling losses.

The oil ser­vices com­pany lost $1.7bn in the sec­ond quar­ter, com­pared with a $75m profit for the same quar­ter last year. As de­mand was wiped out by lock­down re­stric­tions and travel bans in the first half of this year, Hal­libur­ton wrote down the value of its as­sets by $2.1bn this quar­ter.

It had al­ready taken write­downs of $1.1bn in the first quar­ter as the price war be­tween Saudi Ara­bia and Rus­sia sent oil crash­ing to his­toric lows.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.