Chevron Corp said on Monday it would buy oil and gas producer Noble Energy Inc for about $5 billion in stock, the first big energy deal since the coronavirus crisis crushed global fuel demand and sent crude prices to historic lows, Reuters reports.
The oil price crash has decimated shares of many energy companies, making them attractive targets for those that have weathered the downturn and have the resources to buy, according to the Reuters. Chevron ended the first quarter with a cash pile of $8.5 billion after withdrawing a $33 billion bid for Anadarko last year and then being among the first big oil companies to slash spending during the downturn.
The purchase boosts Chevron’s investments in U.S. shale, and gives it Noble’s flagship Leviathan field off the shore of Israel, the largest natural gas field in the eastern Mediterranean.
The Israeli assets “will rebalance the portfolio towards gas and provide a springboard” in the region, said Tom Ellacott, Senior Vice President at Wood Mackenzie.
Oil companies are under pressure to reduce their carbon footprint. Gas is seen as a cleaner burning fuel, the Reuters notes.
Noble shareholders will own about 3% of the combined company, after the deal closes, expected in the fourth quarter.
The deal would add about 18% to the U.S. supermajor Chevron’s proved reserves. Noble had proved reserves of 2.05 billion barrels of oil and gas, while Chevron reported 11.4 billion.