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Chevron to Purchase All Outstanding Shares in Noble Midstream

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Zacks Equity Research
·3 min read
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Chevron Corporation CVX entered an agreement with Noble Midstream Partners LP NBLX to obtain the latter’s remaining outstanding assets in an all-stock deal.

The contract was announced within six months after Chevron’s acquisition of Noble Energy, Inc, the parent organization of the master limited partnership (“MLP”), in one of the biggest deals in the oil industry last year.

Chevron already holds about 63% of Noble Midstream shares and proposed to acquire the remaining 33.925 million publicly-held common units in a $1.32-billion deal. The acquisition offered Chevron coveted shale assets in the Permian Basin of West Texas and massive natural gas fields in the eastern Mediterranean Sea.

Per Reuters, the deal values the MLP at 14.55 per unit, which rose from the initial value of 12.27 per unit when the deal was first announced. Notably, the move will provide Noble Midstream unitholders with 0.1393 common shares of Chevron for each unit held.

The challenging business scenario, owing to the pandemic, has increased the rate of mergers and acquisitions in the energy sector as business integrations enable combined entities to operate at lower costs. Further, it provides them the scale and shared resources necessary to produce oil effectively at affordable prices.

As a result, the acquisition-deal was approved by the conflicts committee of the board, which is formed entirely of independent directors, in consultation with its independent legal and financial advisors. Subsequent to this, the board of Noble Midstream agreed to support the deal and a Chevron subsidiary, as a majority shareholder in the outstanding Common Units also agreed to support the deal.

Importantly, the transaction is scheduled to be completed in the second quarter of 2021 and is subject to customary approvals.

Company Profile

Headquartered in San Ramon, CA, Chevron is one of the largest publicly-traded oil and gas companies. It is fully integrated, with operations all over the world.

Zacks Rank & Stocks to Consider

The company currently has a Zack Rank #3 (Hold).

Some better-ranked players in the energy space are Diamondback Energy, Inc. FANG and Callon Petroleum Company CPE. Diamondback currently sports a Zacks Rank #1 (Strong Buy), while Callon carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Diamondback’s earnings for 2021 are expected to increase 14.1% year over year.

Callon’s earnings for 2021 are expected to rise 30.7% year over year.

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Chevron Corporation (CVX) : Free Stock Analysis Report
 
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
 
Callon Petroleum Company (CPE) : Free Stock Analysis Report
 
Noble Midstream Partners LP (NBLX) : Free Stock Analysis Report
 
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Zacks Investment Research