Chevron’s $13 billion takeover of Noble Energy is biggest oil deal of the year, CEO Michael Wirth

Wednesday, July 22,2020

New York- Chevron CEO Michael Wirth isn’t a fan of bidding wars.

Last year, Wirth wisely walked away when smaller rival Occidental Petroleum (OXY) swooped in to outbid Chevron for shale driller Anadarko Petroleum in a deal worth $58 billion.

The experience paved the way for Chevron to announce a less risky but still major deal this week: It will buy oil-and-gas company Noble Energy (NBL) for $13 billion, in the biggest energy takeover since the pandemic that set off chaos in the industry.

The Anadarko episode helped shape the decision to make a play for Noble Energy now, Wirth told CNN Business in an interview.

“[It] reinforced our existing commitment to discipline, focusing on value creation and understanding risk,” the Chevron CEO said. “We’re not going to chase value.”

But don’t call it a bidding war.
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“We never got into a war. The other party (Occidental) actually bid against themselves multiple times,” Wirth said. “The war wasn’t with us. It was within.”
With the benefit of hindsight,

Occidental’s takeover of Anadarko — the second-biggest ever by a US oil-and-gas company — looks ill-timed. Oil prices crashed, leaving Occidental scrambling to repay the pile of debt it took on in the deal. Occidental slashed its dividend by 99% to a penny a share, made deep cuts to its budget and enforced pay cuts for executives and workers.

 

 

 

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