Chevron to acquire Noble Energy

Chevron is to acquire Noble Energy in an all-stock transaction valued at $5bn, or $10.38 per share, in what is the oil industry’s first big mergers and acquisitions deal since the coronavirus pandemic sent the price of crude plummeting earlier this year. The total enterprise value, including debt, of the transaction is $13bn. The deal is expected to bring annual run-rate cost synergies of approximately $300mn before tax.

Based on Noble Energy’s proved reserves at year-end 2019, the deal will add approximately 18% to Chevron’s year-end 2019 proved oil and gas reserves at an average acquisition cost of less than $5/boe, and almost 7bn barrels of risked resource for less than $1.50/boe.

Commenting on the news, Jean-Baptiste Bouzard, from WoodMackenzie’s upstream research team, says: ‘Israel will provide Chevron with a new core international geography that will rebalance the portfolio towards gas and provide a springboard to capture further upside potential in the region. Much of Noble’s upstream value comes from its positions in Israel and Cyprus. It will be interesting to see if the acquisition boosts development plans for Noble’s Aphrodite discovery, offshore Cyprus, as well as ramping up production from its flagship assets in Israel, Tamar and Leviathan.’

Bouzard also notes that both companies also recently entered upstream Egypt, with a focus on frontier exploration in the offshore Herodotus Basin. Noble’s portfolio in the DJ Basin also adds a new play to Chevron’s US unconventional portfolio and provides complementary Permian acreage that will enhance Chevron’s strong position in the Delaware Basin. In addition, the acquisition brings a strong position in Equatorial Guinea with further growth opportunities.

Tamar facilities
Photo: Nobel Energy