Chevron and Noble Energy confirmed on Tuesday the driving force behind their proposed $5.08 billion merger has been Noble’s Eastern Mediterranean assets, Kallanish Energy reports.
The companies filed a 249-page proxy statement/prospectus agreement on Aug. 11, in which they advise Noble’s shareholders to vote in favor of the merger. They also recommend shareholders to approve proposed merger compensation to Noble’s named executive officers.
The document disclosed a negotiation timeline, which started last year, before the commissioning of production at the Leviathan gas field, offshore Israel.
Noble approached eight infrastructure companies to measure interest in its stake in the Eastern Mediterranean assets. In October 2019, it started non-binding talks with Chevron, which was about to enter Egypt’s upstream and was eying up potential regional cooperation with Noble.
Chevron was interested in purchasing at least 50% of the Eastern Mediterranean assets or full acquisition. In May 2020, Noble said it wasn’t interested in selling 50% or more, “but would be willing to entertain a serious offer to acquire the company.”
Noble saw its stock price collapse 88% due to the effects of the oil price war between Russia and Saudi Arabia, and later the coronavirus pandemic. It reported a first-quarter loss of nearly $4 billion and had its credit ratings downgraded by agencies.
“Similar to its views in July 2019, the Noble Energy Board concluded that to remain competitive in the future and to increase value, stability and diversification, Noble Energy would need to either become a consolidator to gain scale, or be sold to a larger, well-capitalized major, integrated company,” the document said.
The transaction, which including debt is valued at $13 billion, is expected to close in the fourth-quarter 2020. If the deal is terminated, Noble has to pay Chevron a fee of $176.29 million.
Through the deal, Chevron will gain access to the Eastern Mediterranean assets, the West Africa’s Equatorial Guinea gas assets and U.S. shale with assets in the Permian, DJ Basin and Eagle Ford.
The Leviathan field, commissioned in Dec. 2019, contains about two thirds of all the gas resources discovered off the coast of Israel so far and is one of the world’s largest deep water gas discoveries in the first decade of the 21st century.
Noble owns 39.66% of the field, along with Delek Drilling (45.34%) and Ratio (15%).
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