Drama in the gas market: Chevron offers to buy Noble Energy for about $ 5 billion – the capital market

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Drama in the gas market: the energy giant misfortune Offers to purchase the Noble Energy, Which owns the Tamar and Whale reservoirs, about $ 5 billion, according to the Wall Street Journal. Chevron’s proposal – which is in fact a takeover of Noble – was submitted against the background of Noble’s difficulties as a result of the Corona crisis. As long as Noble shareholders approve the offer, it will be the biggest deal in the oil market since the Corona plague began.

Chevron promotes takeover in cash and stock deal. It is offering to buy Noble shares at $ 10.38 a share or 0.1191 Chevron shares – a premium of about 7.6% compared to the closing price of Noble shares on Friday ($ 9.65) and about 12% based on the average of the last ten trading days. Weighted by Noble’s heavy debts, the value of the deal will amount to about $ 13 billion.

The corona crisis hit Noble Energy. The company is facing a drop in its cash flows due to the fall in the price of oil and the damage to the oil shale industry in the US, where Noble is very active. Since the beginning of the year, Noble has fallen 60% $ 20 billion in 2015.

Noble suffered a heavy accounting loss (GAAP) of $ 4 billion in the first quarter of 2020. Since 2015, Noble has lost a total of $ 10 billion. The losses eroded equity to $ 4.4 billion at the end of March 2020, compared to $ 8.4 billion at the end of March 2019.

Noble – led by David Stober – has a large exposure to oil shale oil production activity in the United States, which becomes a loss when the price of oil falls below a level of about $ 35. Its debt of $ 1.8 billion.In 2017, Noble acquired Clayton Williams for $ 2.7 billion – at a 50% market premium.

Following the situation in the oil and gas market, Noble has announced a reduction in its investment budget for 2020 by more than 50% to $ 850-750 million. In addition, the company cut the dividend for the first quarter; Cut 20% -10% in executive pay; And implements an expense efficiency plan. In April, Noble spent 30% of its workforce in the United States, and it is estimated that it will work to increase its workforce.

Following Chevron’s takeover of Noble – gas shares are soaring on the stock market. Ratio, Whale Partner, jumps 11%; Drilling fuel About 9%; Tamar Petroleum About 5% and so is a stock Fuel group.

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Chevron gas station in New Mexico, USAPhoto: Bloomberg

Worldwide assets

Chevron is one of the largest oil companies in the world, with revenues of $ 146 billion per year, a market capitalization of $ 163 billion and assets worldwide in the fields of drilling, refining, marketing of oil and fuel, chemical production and more than 180 countries. It is one of the companies formed as a result of the liquidation of Standard Oil, John D.’s U.S. oil monopoly. Rockefeller disbanded in 1911. It was ranked second among the polluting companies in the world according to a ranking by the British newspaper The Guardian last year.

In the 1930s, Chevron, which began operating in California in the 19th century, obtained oil exploration licenses in Saudi Arabia. In 2000, it merged with Texaco in a $ 45 billion deal, becoming the second largest oil company in the United States and the fourth largest in the world among listed oil companies.

Following the Corona crisis, which dropped the price of oil dramatically below zero, Chevron’s market value was cut by 55% from the beginning of the year to March 23. Since then, the stock has recovered 61%. The value of the assets in the balance sheet is $ 237 billion. At the end of 2019, the company reported a peak in energy output: output equivalent to 3.06 million barrels per day. It distributed dividends and made $ 13 billion repurchases in 2019.

Chevron’s assets span the world: its long-standing U.S. operations base, with headquarters in Houston, Texas; North Sea exploration and drilling operations, in Africa, the Middle East, Latin America and more; research and development centers in Scotland, the U.S. and Australia. The company has a partnership with the state oil company in Venezuela; And drilling and pumping activities in Argentina, Brazil and Mexico.

Chevron has activities in the Middle East, including drilling licenses in the buffer zone between Kuwait and Saudi Arabia. This activity was stopped in 2015 due to a conflict between the countries, but was resumed in early 2020, and according to the company’s website, it is intended to return to previous levels within a year or two. Since 2012, the company has been searching for oil in the Kurdish region of Iraq.

Chevron operates gas stations under three brands: Chevron, Texaco and Caltax. As of 2018, it owns approximately 7,800 U.S. stations.