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Chevron pumped up over $50bn acquisition of Anadarko

14 April 2019

Anadarko is perhaps best known for being a minority partner on BP's ill-fated Macondo project in the Gulf of Mexico, the site of the worst offshore oil spill in USA history in 2010 following a well explosion that killed 11 people.

They include oil and gas exploration and production, crude oil and natural gas transports; refining and products marketing and distribution; transportation fuels and lubricants; manufacturing and sale of petrochemicals and additives as well as power generation.

Once the transaction closes the combined entity will be run by Chevron CEO and Chairman Michael Wirth. Chevron also expects shale to generate profits for its pipeline, trading and refining units. Lemoine now expects that the oil and gas company will earn $0.31 per share for the quarter, down from their prior estimate of $0.32.

"At some point in time in the next few years the majors may reach out", Pioneer CEO Scott Sheffield told Reuters this week, before Chevron's acquisition was announced. The new company will sell US$15 billion to US$20 billion of assets from 2020 to 2022, to reduce debt and return cash to investors.

Following the transaction announcement, Anadarko's shares surged more than 30 percent in pre-market trade on the NYSE on Friday. The fund owned 254,144 shares of the oil and gas development company's stock after buying an additional 61,388 shares during the quarter.

Anadarko had $13.4 billion in revenues a year ago and pumped 666,000 barrels of oil equivalent per day.

The acquisition comes as the US 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.

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It is the oil industry's largest deal since Royal Dutch Shell bought BG Group in 2016, and it sparked speculation that other shale producers are in play.

Analysts predict further consolidation as the smaller companies that revolutionized the industry through advances in horizontal drilling and hydraulic fracking have seen their stock prices languish and have curtailed spending due weak returns. Its wide range of assets from the Permian Basin to the Gulf of Mexico and Mozambique left investors exposed to a multitude of risks in the global oil market. With around 1.5 billion barrels of proved reserves, Anadarko will significantly augment Chevron's already strong shale operations. Anadarko Petroleum based in The Woodlands, Texas.

Occidental may turn its attention to other Permian major shale players now.

For Chevron, Anadarko presented an enticing target. Experts expected first-quarter earnings to have fallen 4.2% in the first quarter. "This is a diversified company with assets in the deepwater Gulf of Mexico, Mozambique, Ghana, Algeria". Based on Anadarko's closing price of $46.80 on Thursday, Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.

"This deal seems ideal".

Occidental Petroleum Corp. had made a US$70-per-share bid for Anadarko and it's now weighing whether to move forward with a counter offer, according to a person familiar with the matter. The total enterprise value of the transaction is 50 billion dollars.

Guyana could see oil exploration activity in the ultra-deepwater region picking up pace in the near future with United States oil giant Chevron set to buy Anadarko Petroleum Corp, which holds an exploration licence for the Roraima Block offshore Guyana.

Chevron pumped up over $50bn acquisition of Anadarko