CNN/20-07-2020

NEW YORK: Chevron announced that it would acquire Noble Energy (NBL) for $5 billion. It’s the biggest energy deal since the Covid-19 pandemic decimated the oil industry. Noble shareholders will receive Chevron stock in this all-stock transaction. Chevron shares traded in the red, dipping as much as 2.7% in the morning. America’s shale oil and gas industry has been hit hard during the pandemic. Demand has tumbled as people stopped traveling and commuting. And energy prices fell as an ill-timed global oil standoff temporarily increased supply while people were using less oil. But to companies looking to snap up cheap assets, these are good conditions to go on a buying spree. The Noble-Chevron tie up fits right in. Adding Noble’s not-so-noble $8 billion debt pile brings the transaction value to $13 billion. Although Noble is in serious debt, its assets including its proven but undeveloped reserves are an attractive and a relatively cheap buy for Chevron (CVX). Buying Noble makes perfect sense for Chevron because the two businesses complement each other, said Andrew Dittmar, senior M&A analyst at Enverus, an information provider for the energy industry.