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Chevron reaches agreement to acquire Anadarko

14 April 2019

Chevron, which already has 2.3 million acres in the Permian Basin, said the deal to buy Anadarko would give the combined company a 75-mile (120-km)-wide corridor across the Permian's DE basin, on the Texas-New Mexico border.

Chevron said it is an opportunity to "high-grade" its portfolio and plans to divest between £11.4bn and £15.2bn of assets between 2020 and 2022, with proceeds used to reduce debt and return cash to shareholders.

Anadarko has always been speculated about as a takeover target for the world's largest oil companies, offering a suite of assets including a massive LNG facility in Mozambique that is racing against an Exxon project to be the first operating in the country.

Industry analysts say the new company will complement each partner, as Anadarko's assets will enhance Chevron's portfolio across a diverse set of asset classes in shale oil production, deep-water production, LNG, crude oil and gas production.

CNBC, citing unnamed sources, reported that Occidental Petroleum had been prepared to pay $70 for Anadarko, but the acquisition by Chevron better positions it to compete with larger rivals Exxon Mobil, Royal Dutch Shell, and BP.

Chevron Corp.'s $33 billion bid for Anadarko Petroleum Corp. may presage a new Permian Basin buying spree, with Irving-based Pioneer Natural Resources Co. and Concho Resources Inc. among the next prime targets. Some of Anadarko's assets may be sold after the deal closes, the company said. Oil executives and bankers had in the past speculated that Shell may buy Anadarko, because they have adjacent acreage.

Analyst firm Rystad Energy said the company has done well with the deal at a value of $50bn (£38.2bn). That's a premium of 39% to the closing price on Thursday. The Houston-based company's willingness to ink a sale, rather than capitalize on oil prices rebounding, illustrates the significant challenges facing many U.S. shale producers.

Anadarko submitted the second most applications for permits to begin drilling in Wyoming a year ago, but it trailed behind in actual production.

Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.

The enterprise value of deal is $50 billion.

With the addition of the Anadarko acreage, Chevron will have a "75-mile (121km) wide highly contiguous corridor, where we can drill, develop, operate and build infrastructure, all with great efficiency", Mr Wirth said on a conference call with analysts. Societe Generale cut shares of Anadarko Petroleum from a "buy" rating to a "hold" rating in a research report on Friday. We Are One Seven LLC purchased a new stake in shares of Anadarko Petroleum during the fourth quarter valued at $41,000.

-Chevron is increasing its annual stock buybacks to US$5 billion from US$1 billion.

Credit Suisse Securities is Chevron's financial adviser, while Paul, Weiss, Rifkind, Wharton & Garrison is its legal adviser.

Chevron, which already has 2.3 million acres in the Permian Basin, said the combined company would have a 75-mile (120-km)-wide corridor across the Permian's DE basin, on the Texas-New Mexico border. Anadarko was advised by Evercore and Goldman Sachs.

The combined companies are expected to produce more than 1.6 million barrels of oil equivalent per day (boepd) in the United States this year and 3.9 million boepd globally, according to Wood Mackenzie.

Chevron reaches agreement to acquire Anadarko