Chevron strikes US$5bn deal to acquire Noble Energy

Chevron Corporation (NYSE:CVX) has struck a deal to acquire Noble Energy Inc (NASDAQ:NBL) for US$5bn in a paper-based deal. The deal is pitched at US$10.38 per Noble share, with shareholders receiving 0.1191 Chevron shares for every Noble share they hold. Including the deal being taken on by Chevron the enterprise value for the deal is marked at US$13bn. Chevron said the transaction provides low-cost, proved reserves and attractive undeveloped resources. The oil supermajor noted that it would also create some US$300mln of annual pre-tax synergies. More specifically, it gives Chevron a 39% stake in the Leviathan gas field, offshore Israel, which is the largest field in the Mediterranean Sea - flowing some 223mln cubic feet of gas per day. In the United States Chevron gains 92,000 contiguous and adjacent acres in the Permian basin. “Our strong balance sheet and financial discipline gives us the flexibility to be a buyer of quality assets during these challenging times,” said Michael Wirth, Chevron chief executive. “This is a cost-effective opportunity for Chevron to acquire additional proved reserves and resources. “Noble Energy’s multi-asset, high-quality portfolio will enhance geographic diversity, increase capital flexibility, and improve our ability to generate strong cash flow.” David Stover, Noble chief executive, meanwhile, added: “The combination with Chevron is a compelling opportunity to join an admired global, diversified energy leader with a top-tier balance sheet and strong shareholder returns. “Over the last few years, we have made significant progress executing our strategic objectives, including driving capital efficiency gains onshore, advancing our offshore conventional gas developments and significantly reducing our cost structure. “As we looked to build on this positive momentum, the Noble Energy Board of Directors and management team conducted a thorough process and concluded that this transaction is the best way to maximize value for all Noble Energy shareholders.” Noble stock rose by more than 9% in Monday’s pre-market deals to trade at US$9.66 while Chevron changed hands at US$87.10, down 0.1%.