Chevron Corporation said on Friday that it had entered into a definitive agreement to buy Anadarko Petroleum Corporation in a stock and cash transaction valued at US$33 billion that will boost Chevron’s position in the Permian, the Gulf of Mexico, and in liquefied natural gas (LNG).
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. Based on Chevron’s closing price on Thursday, and under the terms of the agreement, Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.
The total enterprise value of the transaction is US$50 billion, including the assumption of net debt and book value of non-controlling interest, Chevron said today.
“The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deepwater Gulf of Mexico capabilities and will grow our LNG business,” Chevron’s chairman and chief executive officer Michael Wirth said in a statement.
“It creates attractive growth opportunities in areas that play to Chevron’s operational strengths and underscores our commitment to short-cycle, higher-return investments,” Wirth added.
Chevron believes that the deal will unlock significant value for shareholders, generating anticipated annual run-rate synergies of approximately US$2 billion, and will contribute to free cash flow and earnings one year after close, the CEO said. Related: Big Oil Faces Multi-billion Dollar Fallout From Algeria Crisis
Following the transaction announcement, Anadarko’s shares surged more than 30 percent in pre-market trade on the NYSE on Friday.
Last month, Chevron had already announced plans to significantly grow its production in the Permian, where the U.S. supermajor has added almost 7 billion barrels of resources and doubled its portfolio value over the past two years. Chevron now expects its unconventional net oil-equivalent production in the Permian to reach 600,000 bpd by the end of 2020, and 900,000 bpd by the end of 2023.
By Tsvetana Paraskova for Oilprice.com
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