Chevron to gain Anadarko’s offshore Guyana oil assets after takeover

Chevron's Big Foot deepwater project in the Gulf of Mexico achieved first oil last year

Chevron will acquire Anadarko Petroleum in a $33 billion deal

With oil prices surging this year, Chevron and larger rival Exxon Mobil Corp have been increasing investment in the United States' Permian basin in West Texas, the most prolific shale oil field in the country. The deal comes as oil majors like Exxon Mobil look to carve out a dominant position in the Permian basin, the largest US shale field and the driver of a boom in American oil production.

Anadarko has sizable natural gas assets in Mozambique and is the largest foreign oil producer in Algeria.

It is the largest oil and gas deal since Shell bought BG Group in 2015.

Chevron's purchase of the company is expected to close in the second half of 2019. With LNG demand likely to rise to around 384 million tons per annum by 2020 on the back of strong consumption from Asian importers like China, India, South Korea and Pakistan, Chevron's position as a major supplier of LNG should help the company meet the fuel's growing demand and help cash flow to improve.

Last month, Chevron had already announced plans to significantly grow its production in the Permian, where the US supermajor has added nearly 7 billion barrels of resources and doubled its portfolio value over the past two years.

The transaction will broaden the second highest USA vitality firm's operations in US shale oil and gasoline manufacturing, offshore drilling and liquefied pure fuel exports.

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The sale of Anadarko could likely change that for potential acquirers, including ConocoPhillips and Occidental Petroleum Corp, the two largest U.S. independents behind the majors. Shell has in the past several months held talks with Endeavor Energy Resources LP, the largest privately-owned company in the Permian that bankers say might be valued at US$10 billion to US$15 billion.

According to CNBC, Occidental Petroleum bid more than $70 a share for Anadarko in cash and stock earlier but the company ultimately chose to go with Chevron. Anadarko shares jumped 32 percent, reflecting the offer's 39 percent premium over Thursday's close. Measured by cash flow, Chevron said in a statement it would have generated a combined US$36.5 billion with Anadarko previous year, slightly ahead of Exxon's US$36 billion. Exxon reported average production previous year of 3.833 million.

The companies say the deal creates a 75 mile corridor across the DE basin portion of the Permian.

Under the terms of the agreement, Anadarko shareholders will receive $16.25 in cash and 0.3869 shares of Chevron for each Anadarko share they own.

The company plans to add rigs for the Anadarko acreage, but still estimated a US$1 billion reduction of the combined capital spending of the two companies because of economies of scale, he added.

As oil companies have become more efficient at producing shale oil, which has changed the worldwide equation by making US oil a rival against the cheap oil produced by Organization of the Petroleum Exporting Countries. Chevron will issue about 200 million shares and pay approximately $8 billion in cash. Chevon earned almost $15 billion in 2018 on $166 billion in sales. Credit Suisse Group reissued a "buy" rating and set a $73.00 price objective on shares of Anadarko Petroleum in a research report on Wednesday, December 19th. Evercore Inc. and Goldman Sachs Group Inc advised Anadarko alongside law firms Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP. Chevron said the combined entity in 2018 would have had output of 3.596 million barrels equivalent of oil, compared with Shell's 3.666 million.

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