Gas shares soared to 25%: “Chevron-Noble deal is a game changer for industry” – Capital Market


“Chevron’s entry into operations in Israel is Game Changer. This is great news for the local gas industry. Chevron is a global company that can easily promote huge projects. The main question is how the Arab world will react to the deal, and whether Chevron will have to sell the assets in Israel at a later stage. “We may have already made progress; perhaps even today there are no fears of a boycott of investors by the Arab world due to involvement in Israel,” a senior figure in the energy industry said today.

Energy giant Chevron today announced an agreement to acquire American Noble Energy, a partner in the Leviathan and Tamar reservoirs in Israel. For Noble’s shares, Chevron will pay about $ 5 billion. The purchase agreement – which is in fact Chevron’s takeover of Noble – was signed against the background of the difficulties Noble is suffering from due to the corona crisis and the fall in world energy prices, which led to billions of dollars in losses. In response, stock Noble Leaping into Wall Street trading.

The deal between misfortune Noble has been unanimously approved by the boards of directors, and is expected to close in the fourth quarter of 2020. The transaction is subject to various regulatory approvals, as well as the approval of Noble shareholders. The acquisition of Noble will increase Chevron’s proven oil and gas reserves by approximately 18%. The transaction involves a consideration of $ 5 per barrel of oil in the purchased portfolio (or the equivalent of oil). Weighted by Noble’s heavy debts, about $ 8 billion, the value of the deal will amount to about $ 13 billion.

The Nobel-Chevron deal is pushing gas stocks to extraordinary rises today – presumably against the backdrop of an estimate that a global energy giant’s involvement will support reservoir performance in the coming years – and may even immediately support the refinancing of whale debt by Delek Drilling and Ratio.

Isaac AnswerPhoto: Tomer Applebaum

Stock Ratio Jumped by 25%; Drilling fuel About 23%; Fuel group By 15%, Energian At 4.6%, Tamar Petroleum In about 6% andIsramco At 5%. Delek Group’s bonds also jumped to 9%. The bonds of Ratio Increased by about 3%.

In 2019, Chevron made a major deal with the Delek Group, controlled by Yitzhak Tshuva. As part of the deal, Chevron sold its North Sea gas and oil assets for about $ 2 billion (in exchange for about $ 11 per barrel of proven oil in its portfolio – that is, twice the Chevron-Noble deal). Now, Chevron is expected to be Delek’s partner in Israel, as long as Delek succeeds in the deep crisis. The jump in Delek’s share today may support the raising of capital, in the amount of NIS 163 million, which Delek undertook to make this month.

“Betrayal of investor confidence”

One of the main questions now for Chevron is what will be the reaction of Arab investors to its new involvement in Israel. Energy expert Dr. Anas al-Haji today called on his Twitter account the acquisition of Chevron as a “betrayal of investor confidence”. Chevron has extensive activities in the Middle East, including drilling licenses in the buffer zone between Kuwait and Saudi Arabia. This activity was stopped in 2015 following a conflict Between the countries, but was renewed in early 2020, and according to the company’s website it is destined to return to previous levels within a year or two.Since 2012 the company has started looking for oil in the Kurdish region of Iraq.

Analyst Ella Fried of Leumi Capital Markets has raised the possibility that Chevron will operate to sell its holdings in Israel. “The chances are that the activity in Israel will be sold. In that case, it will be very difficult to find a worthy alternative to Noble,” Fried said. However, according to Chevron’s announcement, it does not appear that it intends to sell – at least not immediately – Tamar or Whale. The announcement states that the databases in Israel diversify Chevron’s asset portfolio, and they are expected to generate high returns with strong cash flows.

Whale drilling rig

Whale drilling rigPhoto: Mark Israel Salem

Fried added: “As befits an era of consolidation, the giants are turning to quality companies whose value has been dramatically harmed. % In the last two years, while Noble has lost about 72%.

“Chevron has been emerging in recent years from mature oil reserves, such as the assets it sold to Ithaca (a fuel group) in the North Sea. American giants prefer to return to North and South America and potential high-rise areas called HUB-WORTHY. The latter is more interested in the potential of the Egyptian father with squinting for developing Africa. Sold a few years later, “Fried said.

The corona struck in Noble

These are Fried

These are FriedPhoto: Ofer Vaknin

The corona crisis and the price war in the oil market earlier this year hit Noble Energy, which is run by David Stober. Noble is facing a decline in cash flows and damage to the U.S. oil shale industry, in which Noble is very active. In the last five years, the stock has lost 75%.

Following the drop in oil prices, Noble suffered deep losses, which hurt its financial strength and forced it to sell assets. The company recorded an accounting loss (GAAP) of $ 4 billion in the first quarter of 2020, resulting from a decrease in the value of its assets. Since 2015, Noble’s losses have accumulated to about $ 10 billion. The losses eroded equity to $ 4.4 billion at the end of March 2020.

Most of Noble’s problems are attributed to the oil – shale oil production activity in the United States, which becomes a loss when the price of oil falls below $ 35. $ 1.8 billion in debt. Noble acquired Clayton Williams for $ 2.7 billion in 2017. The acquisitions increased Noble’s leverage, increasing its sensitivity to changes in oil prices.

Following the situation in the oil and gas market, Noble announced this year that it has reduced 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 took 30% of its U.S. workforce on leave following the epidemic, announcing it would work to increase its workforce.

In a sea of ‚Äč‚Äčuncertainty, activity in Israel continued to be for Noble Anchor a stable and strong profit mainly due to the gas contracts signed with the IEC. Noble owns 25% of the Tamar reservoir, 40% of the whale and 35% of the Aphrodite reservoir in Cyprus. Even today, the IEC continues to pay the Tamar partnership, including Noble, a high price of $ 6.3 per heat unit or $ 4.8 per partnership in Whale. This, while in the United States, Noble sells gas for only $ 1.7 per unit of heat.

Chevron: The Global Energy Grants

Chevron of a Chevron

Chevron of a ChevronPhoto: Mary Altaffer / EP

Unlike other companies, Chevron has reached the corona crisis in a strong financial situation and with low leverage – characteristics that allow it to take advantage of business opportunities and color large deals. Following the Corona crisis, Chevron’s market capitalization was cut by 55% from the beginning of the year to March 23, but since then the stock has recovered by 61%. 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 – traded at a value of $ 163 billion – is one of the largest oil companies in the world. The company has revenues of $ 146 billion per year, and assets worldwide in the fields of drilling, refining, oil and fuel marketing, chemical production and more in 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.

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

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