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Chevron (CVX) Announces Noble Energy Acquisition Deal Closure

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Chevron Corporation (CVX - Free Report) has completed the acquisition of Noble Energy in an all-stock deal worth $5 billion following the approval of the latter’s shareholders. Further, the company will issue 58 million shares and Noble Energy stakeholders will possess 3% of the consolidated entity.

The takeover, which is one of the largest energy deal wins since the beginning of the coronavirus pandemic, also includes Noble Energy's hefty debt load and will be valued at approximately $13 billion.

This strategic move provides the acquired company’s stockholders with 0.1191 shares of Chevron for each share held.

Rationale Behind the Deal

The buyout of Noble Energy’s assets is anticipated to expand Chevron’s presence in the DJ Basin of Colorado and the Permian Basin across West Texas and New Mexico. Particularly, Noble Energy has a total of 92,000 acres in the United States’ number one basin of Permian. The acquisition will also generate potential annual cost savings of $300 million within a year of the deal's closing.

Further, this transaction will fortify Chevron’s international footprint. The company will have access to Noble Energy’s low-cost, proven reserves along with its cash-generating offshore assets in Israel, especially the flagship Leviathan natural gas project, thereby boosting its base in the Mediterranean. Lest we forget, Chevron will also gain Noble Energy’s interests in its midstream partnership Noble Midstream Partners LP .

Per Michael Wirth, Chevron chairman and CEO, Noble Energy’s diversified, high-quality portfolio will improve the company’s topographical diversity, increase its capital flexibility and also better its strong cash flow generating ability. Further, the acquired entity’s assets are expected to enhance Chevron’s operational potencies and the transaction also emphasizes its commitment to disciplined capital deployment.

This plum deal in the U.S. energy sector during 2020 is struck after a little more than a year since Chevron withdrew its acquisition offer to Anadarko Petroleum, falling short of its peer Occidental Petroleum’s (OXY - Free Report) higher bid.

About the Company

Chevron is one of the largest publicly-traded oil and gas companies in the world with operations spread to almost every corner of the globe. A component of the Dow Jones Industrial Average, this currently Zacks Rank #3 (Hold) player is a fully-integrated company, participating in every energy-related aspect, ranging from oil production to refining and marketing.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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