Chevron in $5bn deal to buy Noble

Chevron Corp said yesterday that it would buy Noble Energy Inc in a $5 billion allstock deal, bolstering its shale presence as a plunge in crude prices have made assets cheaper.

The deal, the largest in the US energy sector this year, comes more than a year after Chevron abandoned its offer for Anadarko Petroleum Corp, outmanoeuvred by Occidental Petroleum Corp’s higher bid.

Oil prices plunged to historic lows in April as the coronavirus crisis decimated demand. While prices have recovered from their lows, they remain depressed, making assets cheaper, as a new surge of Covid-19 cases threaten to stall recovery.

“Chevron (is) taking advantage of its strong relative performance versus the US exploration and production companies and capitalizing on the downturn to buy into some high quality assets,” said Anish Kapadia, head of independent oil and mining advisory Palissy Advisors.

The deal will also give Chevron access to Noble’s flagship Leviathan field, the largest natural gas field in the Eastern Mediterranean, which began producing natural gas late last year.

The offer values Noble at $10.38 a share or 0.12 Chevron share, a 7.5% premium to Noble’s Friday close. The deal would value Noble at roughly $13 billion, including debt.

Shares of Noble jumped about 8% premarket, while Chevron was down about 1%.

Noble’s assets will expand Chevron’s presence in the DJ Basin of Colorado and the Permian Basin across West Texas and New Mexico.

Noble shareholders will own about 3% of the combined company.

Chevron had walked away with a $1 billion fee after Occidental clinched a deal last May to buy Anadarko for $38 billion.