Chevron, Anadarko Petroleum in $33b Acquisition deal
Chevron announced Friday that it will purchase Anadarko Petroleum in a cash-and-stock deal worth $33 billion, in what could launch a wave of consolidation as the big oil companies seek to exploit the growing U.S. shale industry.
“This is a megadeal that cements the trend of big oil companies taking over the U.S. shale industry, with more acquisitions to come,” said John Kilduff of Again Capital. “Big Oil has cracked the code, driving down costs in the shale oil region to remarkably low levels. ”
Chevron said it would pay the equivalent of $65 per share — a 37 percent premium over Thursday’s close — which includes 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share. Texas-based Anadarko saw its stock rise more than 31 percent in premarket trading Friday. Chevron shares were down more than 4 percent before the market opened.
The acquisition comes as the U.S. has reversed a decades-long decline in oil production, thanks to new technology that has allowed it to tap hitherto unreachable, so-called “tight oil,” that had been locked deep beneath the surface in shale rock.
The last five years has seen the U.S. double its domestic oil production and become a rival to Saudi Arabia and Russia as the world’s premier supplier. The U.S. now exports oil and gas, which was unthinkable a decade ago.
As oil companies have become more efficient at producing shale oil, which has changed the international equation by making U.S. oil a rival against the cheap oil produced by Organization of the Petroleum Exporting Countries.
“OPEC should be quaking in their collective boots,” Kilduff said.
Giant oil companies such as Chevon, ExxonMobil, BP and Shell have been searching for new sources of energy, including natural gas, which introduce less carbon dioxide into the atmosphere. The rise in carbon dioxide is seen by many scientists as the main driver of climate change.
“As our company has strengthened its financial situation over recent years, we’re always looking to make our portfolio even stronger,” Chevron chief executive Michael Wirth told CNBC in a Friday morning interview in which he announced the deal.
Wirth said Chevron was particularly attracted to Anadarko’s high-quality oil assets, from its natural gas resources in Mozambique to its offshore production in the Gulf of Mexico and its Permian Basin shale.
The combination will create 75-mile-wide corridor in the oil-rich Permian and add to Chevron’s already significant natural gas holdings, which extend from its giant Gorgon field off the northwest coast of Australia to Africa and the United States.
California-based Chevron is one of the largest oil companies in the world, based on its $228 billion market capitalization, and the second only to ExxonMobil in the United States. Chevron earned nearly $15 billion in 2018 on $166 billion in sales. The company has 52,000 employees.
The boards of both companies have approved the deal, which is expected to close in the second half of this year.