Chevron shows COVID-19 resilience with $5 billion Noble Energy deal

Chevron has confirmed it will buy diversified energy firm Noble Energy in a deal that represents the first major outlay in the oil sector since the COVID-19 crisis destroyed fuel demand and sent prices to record lows.

The all-stock transaction is valued at US$5 billion, under which Noble shareholders will receive 0.1191 shares of Chevron for each Noble share. The total enterprise value of the transaction is $13 billion, including debt, Chevron said.

While this deal is significantly smaller than Chevron’s $33 billion bid for Anadarko last year, which was later withdrawn, it reflects a measure of resilience following the oil market crash earlier this year. The company ended the first quarter with a cash pile of $8.5 billion.

The Noble purchase will boost Chevron’s portfolio of assets in the Permian, DJ and Eagle Ford basins in the US, and will see it become the first oil major to enter Israel via Noble’s flagship Leviathan offshore gas field.

Chevron’s CEO Mike Wirth highlighted to Reuters the ‘political differences and tensions’ between Israel and neighbouring states where the firm also has business, including Saudi Arabia, Kuwait, Qatar and the Kurdish region of Iraq.

He said Chevron was ‘apolitical’ and ‘a commercial actor’ in the region. “We engage with all of our different stakeholders as we go through something like this,” Wirth said.