Chevron introduced on Friday it would purchase oil and fuel driller Anadarko Petroleum in a money and inventory deal valued at $33 billion, marking one of many largest vitality sector mergers in years and a transformative second for one of many business's dominant gamers.
Anadarko has always been speculated about as a takeover target for the world's largest oil companies, offering a suite of assets including a massive LNG facility in Mozambique that is racing against an Exxon project to be the first operating in the country.
In aggregate, upon closing of the transaction, Chevron will issue approximately 200 million shares of stock and pay approximately $8 billion in cash.
In oil and gas production terms, the deal puts Chevron neck-and-neck again with Royal Dutch Shell Plc for the title of the second-largest integrated major oil company, slightly behind Exxon.
The shale oil-and-gas boom reversed a long decline in USA crude production and propelled the country to a record 12 million barrels a day (bpd), more than Russian Federation and Saudi Arabia. The oil giant will also "high grade" its portfolio and sell off some $15 billion to $20 billion of assets. The average premium in such transactions was 11 per cent a year ago and 22 per cent in 2017, according to data compiled by Bloomberg.
"Consolidation in deep water and the shales makes complete industrial sense", said Christyan Malek, the head of Europe, the Middle East and Africa oil and gas research at JPMorgan Chase & Co. "It gives the combined entity the ability to high-grade its assets and focus on where the best cash returns are".
The last five years has seen the US double its domestic oil production and become a rival to Saudi Arabia and Russian Federation as the world's premier supplier.
The acquisition consideration is structured as 75 percent stock and 25 percent cash, providing an overall value of US$65 per share based on the closing price of Chevron stock on April 11, 2019.
Chevron's takeover of one of the America's biggest independent oil and gas producers is the first major move towards consolidation since the global oil downturn as output from the United States shale industry continues to rise. Capital One Financial cut shares of Anadarko Petroleum from an "overweight" rating to an "equal weight" rating in a research note on Thursday, December 20th.
Chevron said the deal would add to its free cash flow and profit one year after closing, if Brent crude, now around $70, holds above $60 per barrel.
Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each share they own, or $65 per share. They will also assume about US$15 billion of net debt, giving Anadarko an enterprise value of US$50 billion. As a group, analysts expect that Anadarko Petroleum will post 1.66 earnings per share for the current year. Credit Suisse Securities (USA) LLC is Chevron's financial adviser, while Paul, Weiss, Rifkind, Wharton & Garrison LLP is its legal adviser.
When the acquisition is approved sometime in the second half of 219, the Chevron steps one place higher and becomes the second largest oil-and-gas company of the U.S. after ExxonMobil. Anadarko was advised by Evercore and Goldman Sachs.
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