Chevron to buy Anadarko Petroleum for $33-billion in cash and stock

Data by YCharts

Data by YCharts

Anadarko also has a handful of overseas ventures, including a major liquefied natural gas project in Mozambique that Chevron said would help bolster one of its major global businesses.

Anadarko employs about 1,100 people in Colorado, but has a much larger presence in Texas.

For Chevron, the takeover of Anadarko marks its biggest deal since its purchase of Texaco, which closed in 2001 and vaults the company into the realm of "UltraMajors" as Wood Mackenzie put it, second only to Exxon Mobil in production.

Chevron is buying Anadarko Petroleum for $33 billion, energizing its oil and gas drilling capabilities in Texas and the Gulf of Mexico while vaulting itself into a new league.

The energy firm said the addition of Anadarko's portfolio, which primarily focusses on the Gulf of Mexico and onshore shale in the USA, will "significantly enhance" its own.

The $65 per share offer was structured as 75% stock and 25% cash.

RBC Capital Markets analyst Biraj Borkhataria said: "Chevron has targeted a total of $2bn a year in synergies ($1bn opex and $1bn capex), however we see this as likely conservative as with prior deals in the space".

"Consolidation in deep water and the shales makes complete industrial sense", Christyan Malek, head of EMEA oil and gas research at JPMorgan, said by email.

Chevron's acquisition of Anadarko is meant to enhance its Upstream portfolio and further improve on its already leading positions in large, attractive shale, deepwater and natural gas resource basins, the companies said.

Chevron also said it plans to divest $15 billion to $20 billion of assets between 2020 and 2022.

The merger would be the sixth largest in the industry and the biggest since Shell bought BG Group for £47...

Shale producers such as Pioneer Natural Resources, Continental Resources, Diamondback Energy and Concho Resources have already been under pressure from investors to improve their profitability.

Anadarko shareholders will receive 0.38 shares of Chevron and $16.25 (£12.43) in cash for each of their shares.

Last month, Chevron said it expects shale production from the basin to reach 600,000 barrels per day (bpd) by the end of next year.

-The transaction has a break-up fee equivalent to about 3 per cent of the deal value, according to a person familiar with the matter. The average premium in such transactions was 11 percent previous year and 22 percent in 2017, data compiled by Bloomberg showed.

-Chevron will issue 200 million shares and pay US$8 billion in cash.

-Chevron expects the deal to add to free cash flow and earnings per share one year after closing, at US$60-a-barrel Brent.

An increase in share buybacks from $4 billion to $5 billion per year.

"This is a megadeal that cements the trend of big oil companies taking over the USA shale industry, with more acquisitions to come", said John Kilduff of Again Capital. Finally, SunTrust Banks set a $55.00 price target on shares of Anadarko Petroleum and gave the company a "hold" rating in a research report on Tuesday, January 29th.

The transaction, which has been approved by the boards of directors of both companies, is expected to close in the second half of the year.

Evercore and Goldman Sachs are financial advisers to Anadarko, while Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP are its legal advisers.

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