Chevron is buying Noble for $5 billion in stock in what marks the biggest oil-patch tie-up since the coronavirus pandemic took hold.
Chevron announced on Monday that it will buy Noble at for $10.38 a share, or 0.1191 a Chevron share. At that level, the deal represents a roughly 7.6% premium over Noble’s Friday closing price of $9.65 and nearly 12% based on a 10-day average.
Including Noble debt, the total enterprise value of the deal is $13 billion.
Buying Houston-based Noble, which has both U.S. and international operations, compliments Chevron’s presence in the oil-rich deposits of the DJ Basin of Colorado and Permian Basin, which spans West Texas and New Mexico.
It also gives Chevron, which has a market value of $163 billion, assets in the eastern Mediterranean and West Africa. Chevron's stock was down 2.05% at $85.43.
“Our strong balance sheet and financial discipline gives us the flexibility to be a buyer of quality assets during these challenging times,” Chevron CEO Michael Wirth said in a statement. “This is a cost-effective opportunity for to acquire additional proved reserves and resources."
Chevron’s stock has surged over than 70% from its March 23 low, despite an unprecedented drop in oil prices sparked in part by the coronavirus pandemic and shutdown of economic activity globally, though augmented by a price war between Russia and Saudi Arabia that fueled one of the biggest supply guts in history, pushing futures contracts for West Texas Intermediate--the U.S. bellwether--briefly entered negative territory in April.
So, what does Jim Cramer think of this deal?
Watch the video above for more.
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