- Brings high quality assets to Chevron’s global
portfolio
- Proved reserves to be acquired for under $5 per oil
equivalent barrel
- Delivers $300 million in anticipated annual pre-tax
synergies
- Accretive to ROCE, free cash flow and earnings
Chevron Corporation (NYSE: CVX) announced today that it has
entered into a definitive agreement with Noble Energy, Inc.
(NASDAQ: NBL) to acquire all of the outstanding shares of Noble
Energy in an all-stock transaction valued at $5 billion, or $10.38
per share. Based on Chevron’s closing price on July 17, 2020 and
under the terms of the agreement, Noble Energy shareholders will
receive 0.1191 shares of Chevron for each Noble Energy share. The
total enterprise value, including debt, of the transaction is $13
billion.
The acquisition of Noble Energy provides Chevron with low-cost,
proved reserves and attractive undeveloped resources that will
enhance an already advantaged upstream portfolio. Noble Energy
brings low-capital, cash-generating offshore assets in Israel,
strengthening Chevron’s position in the Eastern Mediterranean.
Noble Energy also enhances Chevron’s leading U.S. unconventional
position with de-risked acreage in the DJ Basin and 92,000 largely
contiguous and adjacent acres in the Permian Basin.
“Our strong balance sheet and financial discipline gives us the
flexibility to be a buyer of quality assets during these
challenging times,” said Chevron Chairman and CEO Michael Wirth.
“This is a cost-effective opportunity for Chevron to acquire
additional proved reserves and resources. Noble Energy’s
multi-asset, high-quality portfolio will enhance geographic
diversity, increase capital flexibility, and improve our ability to
generate strong cash flow. These assets play to Chevron’s
operational strengths, and the transaction underscores our
commitment to capital discipline. We look forward to welcoming the
Noble Energy team and shareholders to bring together the best of
our organizations.”
“This combination is expected to unlock value for shareholders,
generating anticipated annual run-rate cost synergies of
approximately $300 million before tax, and it is expected to be
accretive to free cash flow, earnings, and book returns one year
after close,” Wirth concluded.
“The combination with Chevron is a compelling opportunity to
join an admired global, diversified energy leader with a top-tier
balance sheet and strong shareholder returns,” said David Stover,
Noble Energy’s Chairman and CEO. “Over the last few years, we have
made significant progress executing our strategic objectives,
including driving capital efficiency gains onshore, advancing our
offshore conventional gas developments and significantly reducing
our cost structure. As we looked to build on this positive
momentum, the Noble Energy Board of Directors and management team
conducted a thorough process and concluded that this transaction is
the best way to maximize value for all Noble Energy shareholders.
We look forward to bringing together our highly complementary
cultures and teams to realize the long-term value and benefits that
this combination will deliver.”
Transaction Benefits
- Low Cost Acquisition of Proved Reserves and Attractive
Undeveloped Resource: Based on Noble Energy’s proved reserves
at year-end 2019, this will add approximately 18 percent to
Chevron’s year-end 2019 proved oil and gas reserves at an average
acquisition cost of less than $5/boe, and almost 7 billion barrels
of risked resource for less than $1.50/boe.
- Strong Strategic Fit: Noble Energy’s assets will enhance
Chevron’s portfolio in:
- U.S. onshore
- DJ Basin – New unconventional position with competitive returns
that can be further developed leveraging Chevron’s proven
factory-model approach.
- Permian Basin – Complementary acreage that enhances Chevron’s
strong position in the Delaware Basin.
- Other – An integrated midstream business and an established
position in the Eagle Ford.
- International
- Israel – Large-scale, producing Eastern Mediterranean position
that diversifies Chevron’s portfolio and is expected to generate
strong returns and cash flow with low capital requirements.
- West Africa – Strong position in Equatorial Guinea with further
growth opportunities.
- Attractive Synergies: The transaction is expected to
achieve run-rate operating and other cost synergies of $300 million
before-tax within a year of closing.
- Accretive to Return on Capital Employed, Free Cash Flow, and
EPS: Chevron anticipates the transaction to be accretive to
ROCE, free cash flow and earnings per share one year after closing,
at $40 Brent.
Transaction Details
The acquisition consideration is structured with 100 percent
stock utilizing Chevron’s attractive equity currency while
maintaining a strong balance sheet. In aggregate, upon closing of
the transaction, Chevron will issue approximately 58 million shares
of stock. Total enterprise value of $13 billion includes net debt
and book value of non-controlling interest.
The transaction has been unanimously approved by the Boards of
Directors of both companies and is expected to close in the fourth
quarter of 2020. The acquisition is subject to Noble Energy
shareholder approval. It is also subject to regulatory approvals
and other customary closing conditions.
The transaction price represents a premium of nearly 12% on a
10-day average based on closing stock prices on July 17, 2020.
Following closing of the transaction, Noble Energy shareholders
will own approximately 3% of the combined company.
Advisors
Credit Suisse Securities (USA) LLC is acting as financial
advisor to Chevron. Paul, Weiss, Rifkind, Wharton & Garrison
LLP is acting as legal advisor to Chevron. J.P. Morgan Securities
LLC is acting as financial advisor to Noble Energy. Vinson &
Elkins LLP is acting as legal advisor to Noble Energy.
Conference Call
Chevron will conduct a conference call on Monday, July 20, 2020,
at 8:00 a.m. ET to discuss the transaction.
A webcast of the discussion will be available in a listen-only
mode to individual investors, media, and other interested parties
on Chevron’s website at www.chevron.com under the “Investors”
section, or by calling (833) 674-0417 and providing the
conference ID 8393646. Additional materials will be
available under “Events and Presentations” in the “Investors”
section on the Chevron website.
Note for media: Chevron B-roll footage is available at
https://chevron.co/broll
About Chevron
Chevron Corporation is one of the world's leading integrated
energy companies. Through its subsidiaries that conduct business
worldwide, the company is involved in virtually every facet of the
energy industry. Chevron explores for, produces and transports
crude oil and natural gas; refines, markets and distributes
transportation fuels and lubricants; manufactures and sells
petrochemicals and additives; generates power; and develops and
deploys technologies that enhance business value in every aspect of
the company's operations. Chevron is based in San Ramon, Calif.
More information about Chevron is available at www.chevron.com.
About Noble Energy
Noble Energy is an independent oil and natural gas exploration
and production company committed to meeting the world’s growing
energy needs and delivering leading returns to shareholders. The
Company operates a high-quality portfolio of assets onshore in the
United States and offshore in the Eastern Mediterranean and off the
west coast of Africa. Founded more than 85 years ago, Noble Energy
is guided by its values, its commitment to safety, and respect for
stakeholders, communities and the environment. For more information
on how the Company fulfills its purpose: Energizing the World,
Bettering People’s Lives®, visit www.nblenergy.com.
NOTICE
As used in this news release, the term “Chevron” and such terms
as “the company,” “the corporation,” “our,” “we” and “us” may refer
to Chevron Corporation, one or more of its consolidated
subsidiaries, or to all of them taken as a whole. All of these
terms are used for convenience only and are not intended as a
precise description of any of the separate companies, each of which
manages its own affairs.
Terms such as “resources” may be used in this news release to
describe certain aspects of Chevron’s and Noble Energy’s portfolio
and oil and gas properties beyond the proved reserves. For
definitions of, and further information regarding, this and other
terms, see the “Glossary of Energy and Financial Terms” on pages 54
through 55 of Chevron’s 2019 Supplement to the Annual Report
available at chevron.com.
CAUTIONARY STATEMENTS RELEVANT TO
FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR”
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
This communication contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements generally include statements
regarding the potential transaction between Chevron Corporation
(“Chevron”) and Noble Energy, Inc.
(“Noble Energy”), including any
statements regarding the expected timetable for completing the
potential transaction, the ability to complete the potential
transaction, the expected benefits of the potential transaction
(including anticipated annual run-rate operating and other cost
synergies and anticipated accretion to return on capital employed,
free cash flow, and earnings per share), projected financial
information, future opportunities, and any other statements
regarding Chevron’s and Noble Energy’s future expectations,
beliefs, plans, objectives, results of operations, financial
condition and cash flows, or future events or performance. These
statements are often, but not always, made through the use of words
or phrases such as “anticipates,” “expects,” “intends,” “plans,”
“targets,” “forecasts,” “projects,” “believes,” “seeks,”
“schedules,” “estimates,” “positions,” “pursues,” “may,” “could,”
“should,” “will,” “budgets,” “outlook,” “trends,” “guidance,”
“focus,” “on schedule,” “on track,” “is slated,” “goals,”
“objectives,” “strategies,” “opportunities,” “poised,” “potential”
and similar expressions. All such forward-looking statements are
based on current expectations of Chevron’s and Noble Energy’s
management and therefore involve estimates and assumptions that are
subject to risks, uncertainties and other factors that could cause
actual results to differ materially from the results expressed in
the statements. Key factors that could cause actual results to
differ materially from those projected in the forward-looking
statements include the ability to obtain the requisite Noble Energy
stockholder approval; uncertainties as to the timing to consummate
the potential transaction; the risk that a condition to closing the
potential transaction may not be satisfied; the risk that
regulatory approvals are not obtained or are obtained subject to
conditions that are not anticipated by the parties; the effects of
disruption to Chevron’s or Noble Energy’s respective businesses;
the effect of this communication on Chevron’s or Noble Energy’s
stock prices; the effects of industry, market, economic, political
or regulatory conditions outside of Chevron’s or Noble Energy’s
control; transaction costs; Chevron’s ability to achieve the
benefits from the proposed transaction, including the anticipated
annual run-rate operating and other cost synergies and accretion to
return on capital employed, free cash flow, and earnings per share;
Chevron’s ability to promptly, efficiently and effectively
integrate acquired operations into its own operations; unknown
liabilities; and the diversion of management time on
transaction-related issues. Other important factors that could
cause actual results to differ materially from those in the
forward-looking statements are: changing crude oil and natural gas
prices and demand for our products and production curtailments due
to market conditions; crude oil production quotas or other actions
that might be imposed by the Organization of Petroleum Exporting
Countries and other producing countries; public health crises, such
as pandemics (including coronavirus (COVID-19)) and epidemics, and
any related government policies and actions; changing economic,
regulatory and political environments in the various countries in
which the company operates; general domestic and international
economic and political conditions; changing refining, marketing and
chemicals margins; the company's ability to realize anticipated
cost savings, expenditure reductions and efficiencies associated
with enterprise transformation initiatives; actions of competitors
or regulators; timing of exploration expenses; timing of crude oil
liftings; the competitiveness of alternate-energy sources or
product substitutes; technological developments; the results of
operations and financial condition of the company's suppliers,
vendors, partners and equity affiliates, particularly during
extended periods of low prices for crude oil and natural gas during
the COVID-19 pandemic; the inability or failure of the company's
joint-venture partners to fund their share of operations and
development activities; the potential failure to achieve expected
net production from existing and future crude oil and natural gas
development projects; potential delays in the development,
construction or start-up of planned projects; the potential
disruption or interruption of the company's operations due to war,
accidents, political events, civil unrest, severe weather, cyber
threats, terrorist acts, or other natural or human causes beyond
the company's control; the potential liability for remedial actions
or assessments under existing or future environmental regulations
and litigation; significant operational, investment or product
changes required by existing or future environmental statutes and
regulations, including international agreements and national or
regional legislation and regulatory measures to limit or reduce
greenhouse gas emissions; the potential liability resulting from
pending or future litigation; the company's future acquisitions or
dispositions of assets or shares or the delay or failure of such
transactions to close based on required closing conditions; the
potential for gains and losses from asset dispositions or
impairments; government-mandated sales, divestitures,
recapitalizations, industry-specific taxes, tariffs, sanctions,
changes in fiscal terms or restrictions on scope of company
operations; foreign currency movements compared with the U.S.
dollar; material reductions in corporate liquidity and access to
debt markets; the receipt of required Board authorizations to pay
future dividends; the effects of changed accounting rules under
generally accepted accounting principles promulgated by
rule-setting bodies; the company's ability to identify and mitigate
the risks and hazards inherent in operating in the global energy
industry; and the factors set forth under the heading “Risk
Factors” on pages 18 through 21 of the company's 2019 Annual Report
on Form 10-K and in subsequent filings with the U.S. Securities and
Exchange Commission. Other unpredictable or unknown factors not
discussed in this communication could also have material adverse
effects on forward-looking statements. Chevron assumes no
obligation to update any forward-looking statements, except as
required by law. Readers are cautioned not to place undue reliance
on these forward-looking statements that speak only as of the date
hereof.
Important Information For Investors And Stockholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended. In connection with the potential transaction, Chevron
expects to file a registration statement on Form S-4 with the
Securities and Exchange Commission (“SEC”) containing a preliminary prospectus of
Chevron that also constitutes a preliminary proxy statement of
Noble Energy After the registration statement is declared
effective, Noble Energy will mail a definitive proxy
statement/prospectus to stockholders of Noble Energy . This
communication is not a substitute for the proxy
statement/prospectus or registration statement or for any other
document that Chevron or Noble Energy may file with the SEC and
send to Noble Energy ’s stockholders in connection with the
potential transaction. INVESTORS AND SECURITY HOLDERS OF CHEVRON
AND NOBLE ENERGY ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS
AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders will be able
to obtain free copies of the proxy statement/prospectus (when
available) and other documents filed with the SEC by Chevron or
Noble Energy through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
Chevron will be available free of charge on Chevron’s website at
http://www.chevron.com/investors and copies of the documents filed
with the SEC by Noble Energy will be available free of charge on
Noble Energy’s website at http://investors.nblenergy.com.
Chevron and Noble Energy and certain of their respective
directors, certain of their respective executive officers and other
members of management and employees may be considered participants
in the solicitation of proxies with respect to the potential
transaction under the rules of the SEC. Information about the
directors and executive officers of Chevron is set forth in its
Annual Report on Form 10-K for the year ended December 31, 2019,
which was filed with the SEC on February 21, 2020, and its proxy
statement for its 2020 annual meeting of stockholders, which was
filed with the SEC on April 7, 2020. Information about the
directors and executive officers of Noble Energy is set forth in
its Annual Report on Form 10-K for the year ended December 31,
2019, which was filed with the SEC on February 12, 2020, and its
proxy statement for its 2020 annual meeting of stockholders, which
was filed with the SEC on March 10, 2020. These documents can be
obtained free of charge from the sources indicated above.
Additional information regarding the interests of such participants
in the solicitation of proxies in respect of the potential
transaction will be included in the registration statement and
proxy statement/prospectus and other relevant materials to be filed
with the SEC when they become available.
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Braden Reddall +1 925-842-2209
Chevron (NYSE:CVX)
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