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Chevron Offers to Buy All Outstanding Units in Noble Midstream

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Chevron Corporation (CVX - Free Report) announced that it offered to purchase shares in Noble Midstream Partners LP in an all-stock deal, subsequent to the acquisition of its parent enterprise Noble Energy Inc in 2020.

Chevron is the majority shareholder, with a 62% equitable interest, and the largest customer of pipeline operator Noble Midstream. Notably, the pipeline operator provides crude oil, natural gas and offers several midstream services to Chevron in the DJ Basin of Colorado as well as Texas's Delaware Basin.

The company filed a proposition to the board of directors of Noble Midstream GP LLC, a general partner of Noble Midstream, to acquire all the outstanding units not currently held by Chevron. The deal places the equity value of the partnership at $1.13 billion. Per Chevron, the company offered to purchase the remaining stocks of Noble Midstream at $12.47 per common unit, which is in accordance with its closing price as of Feb 4, 2021.

Chevron has been revising the possibilities for Noble Midstream since the time it gained control of its parent organization. Although it considered divesting its stake, many analysts expected the company to grab the full ownership of the entity over time and enable further consolidation of the business into its operations to reduce costs. Beside this, it grants the full authority over the infrastructure supporting Noble Energy's former operations, thereby, increasing its flexibility to develop those assets.

The proposed transaction will be subject to certain conditions, including the approval of boards of directors and negotiations. Notably, the transaction will be majorly advantageous for Chevron to reduce the complexity of its corporate structure and is likely to adjust long-term interests by merging two highly integrated companies.

Company Profile & Price Performance

Headquartered in San Ramon, CA, Chevron is one of the largest publicly-traded oil and gas companies. It is fully integrated, with operations all over the world.

The company’s shares have underperformed the industry in the past three months. Its stock has gained 12.4% compared with the industry’s 19.9% growth.

 

 

Zacks Rank & Stocks to Consider

Chevron currently carries a Zack Rank #3 (Hold).

Some better-ranked players in the energy space are Eni SPA (E - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), and CNOOC Limited (CEO - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Eni’s earnings for 2021 are expected to increase 315% year over year.

CNOOC’s earnings for 2021 are expected to increase 62.9% year over year.

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