The deal looks great with nearly two years in the books. Is it a credit to Chevron's savvy or Noble's ineptitude?
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Chevron touted the Noble deal as an 18% increase to Chevron reserves at just $5/bbl. Very, very exciting news hoped to really finally get our reserves on track to some increases after many years of being flat around 11 BBOE.
Result? 2020 reserves fell with the 2 BBOE addition. Maybe due to prices? How about 2021 when prices were high. No change. Either the Noble barrels never existed or too many of ours have vanished. Probably a bit of both. Terrible.
The entire DJ BU produces about as much gas as two Gorgon wells. Zzzzz
Deal of the century? More like steal of the century. Like taking candy from a baby.
Name 3 things that are “messes” with either one of those assets. Facts only. Good luck.
You’re obviously asleep missing the analyst questions about Mediterranean LNG and gas marketing options, and how the DJ is CVX’s second largest shale asset behind the Permian. You’re also obviously not privy to asset level performance metrics or you’d know they’re both in the top 60% of the portfolio.
Everything is for sale at any time - but neither one of those assets will be sold near term.
Mediterranean was the only reason for the pick up. DJ's now a mess. It'll be cast aside and will perform better in someone else's hands.
Same with Unocal assets - they are pretty much all gone. Indonesia gas, Alaska, Canada, Thailand, etc.
Mediterranean is viewed as “an option” but MW doesn’t want to invest much; probably will sell after drilling done. DJ is undergoing cost optimization in prep for a sale as well.
@8ran it might be good for you to look into business school before you start weighing in on things you don’t understand
Management is already quietly papering over the Noble mess. It is not mentioned anywhere in the 2nd quarter results, nor is DJ Basin nor Mediterranean...
@8ran: I’m glad you don’t make large strategic investment decisions for CVX shareholders.
The NBL acquisition was the best upstream m&a deal of 2020. Period.
You seem confused, talking in circles about the purchase price. It was astronomical at $12B due to the debt. If we had simply purchased Chevron share buybacks at the time we would have picked up our stock at the time we were distracted looking at Noble (early 2020), we would have nearly tripled it today with no muss, no fuss, no headaches, no entanglements in states and countries we don't need to be in, no entitled staff, etc.
@8trw: You’re confusing market cap with enterprise value. Add the debt on top of the market cap and that’s the purchase price.
I believe NBL today would have actually been closer to $20B-$22B. NBL’s market cap in 2018 was ~$17B when oil was ~$75/bbl and gas $3.50/mcf.
We paid ~$12B in 2020 for what would have cost us ~$32B today with a 20% shareholder premium (not even sure 20% would get it done today).
So yeah. A steal.
$12B, that's pretty exciting. Except we paid $4B plus $8B in debt which sums, according to my math, to $12B. And we paid it an oil price of less than half what it is today. So we paid $12B for something worth maybe $6B? We "stole" Noble for just 200 cents on the dollar?
Senior leadership wanted a payday and convinced a tired board to go along. The deal looks awful for Noble shareholders and employees in hindsight. Noble would be a $12B plus market cap company today if senior leadership hadn't bungled and bailed.
Wee done BD team (Jay Pryor all the way down). This was a great deal that has created a lot of value- Thanks
Panic move for NBL equaled a huge windfall for CVX. Workers took it in the chin so management could ride off in the sunset.
DS was close to retirement and had made some very bad investment decisions for Noble. For example, Noble way over paid Clayton Williams for its Permian assets. DS had the finance department Noble's production forecast at $50/bbl flat and told the BOD that Noble would not have enough cash flow to meet its debt obligations. He basically fear mongered the BOD into selling Noble. He, on the other hand, reaped a nice windfall for selling out the company and he is now on the BOD of Apache. He had seen how Mike Bowlin, the last CEO of ARCO, got a golden parachute for selling ARCO to BP when oil prices were low. The Noble shareholders lost out big time, but DS came out of very well. Basically, he sold out everyone for his own personal gain.
Don't forget CVX sold AMBU assets for less than one tenth of what was paid in 2011 when the gas price was the lowest. Now the gas price is 7 times of what it was in earlt 2020. CvX just had to get so.ething after walking away from Anadarko, it was just luck.
I helped work the deal and it’s mostly the second - if you recall, CVX only wanted the NBL Mediterranean assets, and the NBL BOD basically threw in everything else for free. It really seemed like their leadership just wanted out.
The ROI on the NBL acquisition is huge - one of the biggest fails in history of O&G for destruction of NBL shareholder value for selling at the bottom - one of the best deals ever for team CVX!
Another great win has been the people. We initially only looked at the hard assets. The NBL operations and technical teams have been incredibly good.