Chevron Corporation, the parent company of Chevron Nigeria Limited (CNL), on Friday announced a definitive agreement to acquire Anadarko Petroleum Corporation.
Chevron is one of the world’s biggest integrated energy companies with subsidiaries involved in virtually all facets of the energy industry.
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.
Anadarko Petroleum, reputed to be one of the world’s largest independent exploration and production companies, is involved in oil and gas exploration and production, acquisition and development of oil and natural gas resources vital to the world’s health and welfare.
Chevron’s chairman and CEO, Michael Wirth, celebrated the agreement as a transaction that “builds strength on strength for Chevron.”
“The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deep-water Gulf of Mexico capabilities and will grow our LNG business.
“It creates attractive growth opportunities in areas that play to Chevron’s operational strengths and underscores our commitment to short-cycle, higher-return investments,” Mr Wirth said.
He said the acquisition of Anadarko will significantly enhance Chevron’s already advantaged upstream portfolio and further strengthen its leading positions in large, attractive shale, deep-water and natural gas resource basins.
“This transaction will unlock significant value for shareholders, generating anticipated annual run-rate synergies of approximately $2 billion, and will be accretive to free cash flow and earnings one year after close,” he added.
Anadarko chairman and CEO, Al Walker, also hailed the agreement as a great opportunity to look forward to.
“The strategic combination of Chevron and Anadarko will form a stronger and better company with world-class assets, people and opportunities,” he said.
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.
Under the new arrangement, Chevron plans to divest $15 to $20 billion of assets between 2020 and 2022.
The divestment proceeds are to be used to further reduce debt and return additional cash to shareholders.
Details show the acquisition is structured as 75 percent stock and 25 percent cash, providing an overall value of $65 per share based on the closing price of Chevron stock on April 11, 2019.
In aggregate, upon closing of the transaction, Chevron will issue approximately 200 million shares of stock and pay approximately $8 billion in cash.
Chevron says it will also assume estimated net debt of $15 billion, with total enterprise value of $50 billion, including the assumption of net debt and book value of non-controlling interest.
The transaction has already been approved by the Boards of Directors of both companies and is expected to close in the second half of the year.
The acquisition is however subject to Anadarko shareholder approval and regulatory approvals and other customary closing conditions.
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