Chevron Corp. completed its acquisition of Houston-based independent E&P company Noble Energy Inc. on Oct. 5, marking the close of the first big energy deal since the coronavirus-driven oil market crash.

The San Ramon, Calif.-based oil major agreed to the all-stock deal in July that valued Noble Energy at around $5 billion. The total enterprise value, including debt, of the transaction is about $13 billion.

“We are pleased to welcome Noble Energy’s employees and shareholders to Chevron,” said Chevron Chairman and CEO Michael Wirth in a statement on Oct. 5. 

The acquisition of Noble makes Chevron the No. 2 U.S. shale oil producer behind EOG Resources Inc. and gives it nearly 1 Bcf of international natural gas reserves close to growing markets.

“Noble’s high-quality assets complement Chevron’s advantaged upstream portfolio, and the combination is expected to deliver strong financial benefits,” Wirth continued. “With an industry-leading balance sheet and a track record of capital discipline, we believe we’re in a different place than others and can protect the dividend while driving long-term value.”

Founded more than 85 years ago, Noble Energy operated a portfolio of U.S. shale assets, including in the prolific Permian Basin plus positions in the Denver-Julesburg Basin of Colorado and the Eagle Ford in South Texas. Noble’s international portfolio included assets in the Eastern Mediterranean Sea near Israel and Cyprus and offshore West Africa in the waters of Equatorial Guinea.

Chevron expects the combination to generate annual run-rate cost synergies of approximately $300 million before tax, and to be accretive to free cash flow, earnings and book returns one year after close, Wirth said in a statement in July.

The acquisition consideration for the Noble transaction is structured with 100% stock. Chevron agreed to issue upon closing approximately 58 million shares of stock. Noble Energy shareholders will receive 0.1191 shares of Chevron for each Noble Energy share and are expected to own approximately 3% of the combined company.

The transaction price represented a premium of nearly 12% on a 10-day average based on closing stock prices on July 17, according to a Chevron’s announcement of the deal.

The deal has become even cheaper for Chevron since it was announced in July, however, as shares of both companies have traded down alongside oil. The deal is worth about $4.1 billion based on the closing price for Chevron of $71.19 on Oct. 2, according to a Reuters report.

On Oct. 1, Noble shareholders approved the pending merger with Chevron and all other proposals related to the merger at the company’s special meeting of shareholders.

Elliott Management Corp. took an undisclosed stake in Noble earlier this year but never came out publicly against the deal. Reuters reported the activist investor declined on Oct. 2 to say how it voted its shares or whether it has sold or kept its stake.

Credit Suisse Securities (USA) LLC was financial adviser to Chevron for the transaction. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as the company’s legal adviser. Meanwhile, J.P. Morgan Securities LLC was financial adviser to Noble Energy with Vinson & Elkins LLP acting as its legal adviser.

Reuters contributed to this article.

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