Chevron's $13 bn Acquisition of Noble Energy

By: Anthony Borgese, Susan Xiao, Mariana Velasco (Wharton) and Zahra Malik, Devi Vanalia (University of Manchester)

 

Overview of the deal


Acquirer: Chevron Corporation.

Target: Noble Energy

Implied Equity Value: $5bn

Total Transaction Value: $13bn

Close Date: Estimated 4Q20

Target Advisor: Vinson & Elkins LLP


On July 20, 2020, Chevron announced its acquisition of Noble Energy for a total of $5 billion in an all stock transaction, implying a value of $10.38 per share. In the past few years, Noble has struggled with funding and with its debt load. The acquisition will give Chevron access to largely undeveloped resources mainly in Israel and the Southwestern United States, promising enhanced future cash flows and portfolio. This acquisition is widely considered to be an excellent deal for Chevron considering the low acquisition price and the potential to grow Chevron’s production potential.


Chevron’s acquisition of Noble was executed with a relatively low premium of 7.5% over Noble’s July 17th closing stock prices. This both reflects the hits that oil and natural gas assets have experienced in 2020 and a relatively dim outlook for oil and gas acquisitions in the near future. However, it is still the first major energy acquisition since the beginning of the pandemic.



Company Details: Chevron


Chevron is an American multinational energy corporation. As a successor company of Standard Oil, Chevron is now one of the world’s largest companies, ranking fifteenth in the Fortune 500 as of March 2020. Chevron is actively involved in every aspect of the oil, natural gas, and the geothermal energy industries. Aside from producing and transporting crude oil and natural gas, refining, marketing, and distributing fuel, the company is also involved in chemical and mining operations, power generation, and energy services.


Founded in 1879 and headquartered in San Ramon, California.


Chairman & CEO: Michael Wirth

Number of Employees: 48,200

Market Cap: $168.16bn

EV: $192.95bn

LTM Revenue: $142.817bn (as of March 31st, 2020)

LTM EBITDA: $35.871bn (as of March 31st, 2020) LTM EV/Revenue: 1.35x

LTM EV/EBITDA: 5.38x



Company Details: Noble

Noble Energy operates as an exploration and production company. The company is in charge of the acquisition, exploration, and development of crude oil and natural gas. Noble energy operates in the United States, Israel and Equatorial Guinea. The company also operates and acquires domestic midstream infrastructure in the DJ and Delaware Basins.