Chevron acquires Andarko Petroleum Corporation | United Arab Emirates | Oil & Gas
Apr 15 2019
Oil major Chevron Corp's $33 billion deal on Friday to acquire Anadarko Petroleum Corp has some investors and industry executives asking whether it is time for other United States shale oil and gas producers to consider selling themselves.
Pioneer Natural Resources (NYSE:), Parsley Energy (NYSE:) and Concho Resources (NYSE:), major Permian shale companies, rallied on news of the deal. Pinnacle Bank bought a new stake in Occidental Petroleum during the fourth quarter valued at approximately $28,000.
The offer of $65 per share represents a 39 percent premium to Anadarko's Thursday close.
Chevron has agreed one of the largest takeovers in the global oil industry with a $50 billion deal to buy Anadarko, an independent American producer.
Sentiment was also boosted on Friday by a massive deal in the energy sector. "As our company has strengthened its financial situation over recent years, we're always looking to make our portfolio even stronger".
Chevron will have greatly expanded access to assets as a result of the combination.
Last month, Chevron said it expects shale production from the basin to reach 600,000 barrels per day (bpd) by the end of next year.
The sale of Anadarko could likely change that for potential acquirers, including ConocoPhillips and Occidental Petroleum Corp, the two largest USA independents behind the majors.
With the addition of the Anadarko acreage, Chevron will have a "75-mile (121km) wide highly contiguous corridor, where we can drill, develop, operate and build infrastructure, all with great efficiency", Mr Wirth said on a conference call with analysts. The Oil & Gas segment explores for, develops and produces oil and condensate, natural gas liquids and natural gas.
He added: "We have written extensively about our caution on Chevron relative to peers, noting that we thought its growth options outside of the Permian were weaker than peers". Anadarko Petroleum had a net margin of 4.60% and a return on equity of 10.14%. Drillers have increasingly turned to the low-priced strategy to avoid the massive expense of building multibillion dollar deepwater platforms. It also expands its oil and gas operations in the Gulf of Mexico and in liquefied natural gas.
LNG. Chevron will gain another world-class resource base in Mozambique to support growing LNG demand.
The transaction has been approved by the Boards of Directors of both companies and is expected to close in the second half of the year.
With savings the companies plan to book and rising cash flow, Chevron said Friday that it will bump up annual stock buybacks to $5 billion, from $4 billion a year, once the transaction is complete.
Chevron said it is an opportunity to "high-grade" its portfolio and plans to divest between £11.4bn and £15.2bn of assets between 2020 and 2022, with proceeds used to reduce debt and return cash to shareholders.
Chevron has entered into a definitive agreement with Anadarko to acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at 33 billion USA dollars, or 65 dollars per share, the company said in a statement.