Chevron acquires Nobel Energy 　　

On July 20, Chevron, the second largest oil company in the United States, announced the acquisition of oil and gas producer Nobel Energy for US$5 billion through an all-stock form. Including debt, the total value of this transaction is $13 billion. If this transaction takes place, it will be the largest M&A in the energy sector since the impact of the new crown pneumonia epidemic on the oil and gas industry.

　　 Chevron said that based on the 10-day average price of the closing stock price on July 17, 2020, the transaction price premium was nearly 12%. After the transaction is completed, the original shareholders of Nobel Energy will hold approximately 3% of the combined company, which is expected to be completed in the fourth quarter of this year.

Chevron said that one of the benefits of this transaction is that based on Nobel Energy’s proven reserves at the end of 2019, the average acquisition cost of less than US$5 per barrel of oil equivalent will enable Chevron’s exploration at the end of 2019. It shows that oil and gas reserves have increased by about 18%, and nearly 7 billion barrels of risk resources have been obtained at a price of less than US$1.5 per barrel of oil equivalent. In addition, Nobel Energy's assets will strengthen Chevron's investment portfolio in the United States and in Israel and West Africa internationally, and it will also be the first time a US energy giant has entered Israel. The transaction is expected to achieve pre-tax cost synergies of US$300 million before tax within one year after the transaction is completed. After the transaction is completed, Chevron will issue approximately 58 million shares.

　　 Chevron said that the acquisition of independent oil and gas producers is in line with Chevron’s strategic plan, which focuses on international natural gas business and US shale oil production. Chevron CEO Mike Worth said when talking about why Chevron chose to acquire Nobel Energy: The acquisition of Nobel Energy provides Chevron with low-cost proven reserves and attractive undeveloped resources. Will enhance the upstream investment portfolio that already has advantages. Nobel Energy’s low-cost, cash-generating offshore assets in Israel have strengthened Chevron’s position in the Eastern Mediterranean. The acquisition of the company will allow Chevron to expand its business in the Denver-Julsburg Basin, Colorado, and the Permian Basin spanning western Texas and New Mexico. "Our strong balance sheet and financial discipline allow us the flexibility and flexibility to acquire high-quality assets during this challenging time. This merger is expected to unlock value for shareholders and is expected to generate approximately US$300 million in pre-tax cost synergies per year. , And is expected to increase free cash flow, profitability and book return one year after the transaction ends." Mike Worth said.

David Stover, Chairman and CEO of Nobel Energy, said: "In the past few years, we have made significant progress in achieving our strategic goals, including promoting the improvement of onshore capital efficiency and advancing the development of offshore conventional natural gas. Reduce cost structure. The merger with Chevron is the best way to maximize value for all Nobel Energy shareholders."

　　Chevron has always hoped to expand its shale gas business in the United States. Since the beginning of this year, due to the outbreak of the epidemic, drilling volumes and profits in the Permian Basin have been significantly reduced. The crisis hit market demand and pushed crude oil prices to an average price of US$20 per barrel in April. Oil prices have rebounded recently, but the market is still in a downturn, which has also made many assets cheaper. In 2019, Chevron tried to acquire Anadarko, but Chevron abandoned the acquisition plan after the same bidding Occidental Petroleum Corporation raised its offer. This year, Chevron took advantage of the market downturn and launched another acquisition.

　　 Market participants said that this acquisition by Chevron is the first major acquisition in the energy industry after the outbreak, and it is also the fourth-largest upstream oil and gas asset M&A transaction in terms of transaction volume since 2014, which is of certain significance. However, this transaction is only equivalent to 7% of Chevron's own value, and the size of the transaction is far smaller than the $50 billion required to acquire Anadarko. It also reflects the current energy industry's cautiousness in financial issues. Andrew Dittmar, an analyst at data provider Enverus, said that Chevron was only paying a "modest premium" to acquire Nobel Energy. This also reflects the current buyers' cautious attitude towards market prospects.