Chevron agreed this week to acquire Noble Energy, mostly because of its shale oil and gas assets in the US, at a bargain price of close to $5billion – about 40 per cent of the value of the company at the start of the year. It will be an all-stock deal, equivalent to about 3 per cent of Chevron’s market value.
But Chevron is also interested in Noble’s East Med natural gas assets, which, in addition to Tamar and Leviathan in Israel, also include the Aphrodite gas-field in Cyprus’ EEZ.
Chevron is the second largest US oil company, with global operations. The company is very keen to expand its US shale assets. Having failed to acquire Anadarko last year, that was the main driver behind this acquisition. Through this, it makes it possible for Chevron to expand shale presence in the oil-rich Permian Basin in Texas and the DJ Basin in Colorado, where it is targeting to maintain production of over 1million barrels/day through to 2040.
Given Noble’s debt, which Chevron inherits, the total cost of the deal is more than $13billion, but it is still a bargain. It still is a cost-effective opportunity for Chevron to acquire additional, low-cost, proved reserves and resources.