Chevron has agreed to buy Houston-based Noble Energy for $5 billion in an all-stock deal. The price is $10.38 per share. Including debt, the deal values Noble at $13 billion.
The price represents a premium of nearly 8% over the closing price on Friday. However it is considerably lower than the 52-week high of $27.31.
Noble’s primary assets are in the Eastern Mediterranean sea (Israel and Cyprus). These will fit well with Chevron’s assets in Egypt. Noble also has 92,000 contiguous net acres in the Permian which are next to Chevron’s acreage. Noble also has 336,000 of net acres in the DJ Basin in Colorado. This would be a new onshore basin for Chevron.
Chevron will also acquire Noble’s 63% stake in publicly-traded Noble Midstream Partners.
Chevron expects to generate annualized operating and cost synergies of $300 million, though there were no details of how this is broken out.
The deal represents the first major acquisition by Chevron since it decided not to get into a bidding war with Occidental last year for Anadarko. Chevron did, however, walk away with a $1 billion termination fee from that contest.
The executive management of Noble will receive large payments if they are terminated becasue of a change of control. Chairman and CEO David Stover will receive a severance payment of $8.2 million, representing 2.99 times base salary and target annual bonus. He will also get close to $10 million in pro-rated bonuses and stock that vests. Likewise COO Brent Smolik will get a $4 million cash severance and another $5 million in pro-rated bonuses and stock vesting. The figures for CFO Ken Fisher are $1.2 million and close to $3 million, respectively.
The deal is expected to close in the fourth quarter of 2020.