Details of Noble Energy and Chevron merger
Lower global demand for energy and collapsing prices led to a crisis in the US oil industry. Many producers declared bankruptcy, while others had to adjust to today’s realities. Even the industry’s giants could not resist and were forced to look for a way out in order not to close down definitively. The latter included Noble Energy, an oil production company acquired by Chevron Corporation. The sum of the merger deal will amount to $5 billion, which will be the largest in the oil industry since the beginning of the pandemic.
Under the terms of the merger, Noble Energy shareholders will receive 0.1191 shares of Chevron for each of their securities. According to current quotations, this proposal indicates that the securities of Noble Energy are worth about $10.3, of which 7.6% is a premium.
Business at Noble Energy is not very good, with the beginning of the pandemic, it has increased its debt, and given this amount, the deal is estimated at $13 billion.
After the takeover Noble Energy shareholders will receive about 3% of the new corporation.
This deal is a great opportunity for Chevron to increase its capacity and market presence. Through prudent asset management and optimization of production processes to reduce losses, the company was able to find the resources to make profitable purchases. Noble Energy’s capacity will allow Chevron to strengthen its position in the Perm basin. In addition, its proven oil reserves will now increase by 18%.
Noble Energy Inc., the oil and gas producer, was founded in 1932 by Lloyd Noble, headquartered in Texas. The company operates not only in the US market, but also in Israel, China, Africa, Ecuador and the North Sea.
Originally, the corporation was called Samedan Oil and was located in Oklahoma. Gradually the company developed, and by 1970 it was reformed into a large holding Noble Affiliates, which had three key areas – well drilling, oil and gas production, and cargo transportation.
The first placement of the holding’s shares took place in 1980 on the New York Stock Exchange. This period was the peak for the company, it managed to achieve the maximum values of profitability, and then gradually decreased. Already by 1985 Noble Energy became unprofitable, and in order to preserve its activities, the management restructured. It was decided to get rid of the motor transport direction, and the service business became an independent company. In addition, in the late 80’s, an additional issue of shares was carried out, which allowed to reduce debt.
Thanks to the introduction of effective measures, by 1995 the company had coped with the crisis, settled all financial problems and started a new stage of activity.