Chevron Corp. announced a $5 billion deal Monday to buy Houston-based Noble Energy, the second-largest oil and gas producer in Colorado’s Denver-Julesburg Basin.
Chevron said in a statement that Noble Energy provides it with “low-cost, proved reserves and attractive undeveloped resources” and offshore assets that will strengthen the company’s position in the Eastern Mediterranean.
Acquiring Noble Energy will also enhance Chevron’s U.S. unconventional shale resources with proven assets on 336,000 acres in the Denver-Julesburg Basin on the northern Front Range and 92,000 acres near Chevron’s holdings in the Permian Basin, the company said. A presentation to investors referred to Denver-Julesburg’s “high quality” assets.
The agreement is the first major acquisition announced since the crash in oil prices due to the coronavirus pandemic, said Andrew Dittmar, a senior analyst with Enverus, which provides data and intelligence to energy companies.
The agreement calls for acquiring all of Noble Energy’s outstanding shares in an all-stock transaction for $10.38 per share. Noble Energy shareholders will receive 0.1191 shares of Chevron for each Noble Energy share. The total value, including debt, of the transaction is $13 billion.
In April 2019, Chevron was set to acquire Anadarko Petroleum, the largest producer in Colorado, in a deal valued at $33 billion when Occidental Petroleum started a bidding war. Occidental acquired Anadarko for $57 billion.
Noble Energy assets are probably the most similar to those of Anadarko’s, said Dittmar. Noble Energy checks a lot of the same boxes, Dittmar added, including having undeveloped resources in the Permian Basin, international natural gas resources and well-known, reliably productive wells in the Denver-Julesburg basin.
Noble Energy’s daily production in the basin along the northern Front Range totaled about 150,000 barrels of oil equivalent, or oil and natural gas. Although Chevron didn’t give specific plans for Noble’s assets, Dittmar said it doesn’t sound like the company has any imminent plans to market the operations in Colorado.
“It’s a good, cash-flowing asset for them,” Dittmar said of the Denver-Julesburg Basin. “It has a good, fairly mature, stable production base and you want some of those assets in your portfolio.”
Dittmar sees the announcement of the acquisition as good news for the Colorado oil and gas industry.
“It’s always great to bring an operator like Chevron in. Not that Noble’s not a top-tier operator. But in a tough market, whether you’re an investor or a landowner or a community, you want the largest, better-capitalized, strongest companies in your area,” Dittmar said.
The boards of both companies have unanimously approved the transaction, which is expected to close in the fourth quarter of 2020.
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