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Why Chevron bought Anadarko




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The logo of Anadarko Petroleum Corp. is displayed over a merchandise on the floor of the New York Stock Exchange Friday, April 1

2, 2019. The energy companies rallied after Chevron said it would pay $ 33 billion to buy rival Anadarko Petroleum. (AP Photo / Richard Drew)

ASSOCIATED PRESS

Last week, Chevron sent ripples through the oil industry by accepting to buy & nbsp; Anadarko in the sixth largest oil and gas deal in history.

Chevron approved to pay $ 65 per share Anadarko, which was a 39% premium to Anadarko's final final price before the deal's announcement. & nbsp; Chevron's outlay will be $ 33 billion Anadarko has a $ 17 billion debt for a total cost of Chevron of $ 50 billion.

Anadarko has a comprehensive global portfolio, but the key to this deal is in the promise of the Permian Basin, which is now the world's & nbsp; top oil pro duction & nb sp; region. This agreement had several synergies that made it particularly attractive to Chevron.

As Chevron points out, & nbsp; – agreement several of its existing fields to create a 75 kilometer wide corridor in the Permian Basin. Coupled area allows for the drilling of longer sides, and allows a manufacturer to extract more oil from a well, which in turn reduces the cost per barrel.

Chevron was already one of the top landowners in Permian. This acquisition increases Chevron's area with over 240,000 network areas to over 1.4 billion network areas in the Delaware Basin, where shale oil economy is probably the best in the country.

An additional synergy for Chevron is that they did not have I have been a major player in the midfield, which involves transport and storage of oil and gas. This deal gives Chevron a 55% stake in Western Midstream Partners, a publicly traded $ 16 billion championship.

Western Midstream's assets are located in the Rocky Mountains, North Central Pennsylvania, and Texas. The company is engaged in collecting, compressing, treating, processing and transporting natural gas; collecting, stabilizing and transporting condensate, natural gas liquids and crude oil; and collection and disposal of produced water. Chevron thus immediately gets a large presence in the midfield.

Anadarko's shareholders are undoubtedly pleased with the immediate 30 +% increase in the share price. But a number of other operators in the Permian Basin saw their stock prices also rise, before they could also be an acquisition target.

Beyond Chevron, the largest holders of the Permian Basin include Occidental, Apache, ExxonMobil and Concho Resources. Western, in fact, attempted to acquire Anadarko before Chevron seal the deal. But Occidental can now find himself in the crosshairs of a larger player who wants to shore up his Permian portfolio.

Other major manufacturers in & nbsp; Permian includes ConocoPhillips, EOG Resources, Pioneer Natural Resources, Noble Energy, Devon Energy, and Diamondback Energy (which acquired Medar's Permian manufacturer & nbsp; Energen Corporation in 2018). These companies can be targeted by super mares or they can look to target smaller permian manufacturers such as WPX Energy, Parsley Energy or Cimarex Energy.

Which companies can be next in the Permian acquisition list? And who could be interested in making acquisitions? I will compare and contrast them in the next article.

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The logo of Anadarko Petroleum Corp. is displayed over a trading ground floor on the New York Stock Exchange Friday, April 12, 2019. Energy companies ranked after Chevron said it would pay $ 33 billion to buy rival Anadarko Petroleum (AP Photo / Richard Drew)

ASSOCIATED PRESS

Last week, Chevron sent ripples through the oil industry by accepting to buy Anadarko in the sixth largest oil

Chevron agreed to pay $ 65 per share Anadarko , a 39% premium to Anadarko's latest closing price before the deal was announced, Chevron's outlay will be $ 33 billion plus the assumption of Anadarko's $ 17 billion debt for a total cost of $ 50 billion.

Anadarko has a comprehensive global portfolio, but the key to this agreement is in the promise of the Permian Basin, which is now the world's top oil production reg n. This agreement had more synergies that made it special attractive to Chevron.

As Chevron points out, the agreement links several of its existing fields to create a 75-kilometer-wide corridor in the Permian Basin. Coupled area allows for the drilling of longer sides, which makes it possible for a manufacturer to extract more oil from a well, which in turn reduces the cost per barrel.

Chevron was already one of the top acreage holders in Permian. This acquisition increases Chevron's area of ​​240,000 acres to over 1.4 million acres in the Delaware Basin, where shale oil economy is probably the best in the country.

An additional synergy for Chevron is that they had not been a big player in the midstream space, which involves transport and storage of oil and gas. This deal gives Chevron a 55% stake in Western Midstream Partners, a publicly traded $ 16 billion business venture.

Western Midstream's assets are located in the Rocky Mountains, North Central Pennsylvania, and Texas. The company is committed to collecting, compressing, treating, processing and transporting natural gas; collecting, stabilizing and transporting condensate, natural gas liquids and crude oil; and collection and disposal of produced water. Chevron thus immediately gets a large presence in the midfield.

Anadarko's shareholders are undoubtedly pleased with the immediate 30 +% increase in the share price. But a number of other operators in the Permian Basin saw their stock prices also rise, before they could also be an acquisition target.

Beyond Chevron, the largest holders of the Permian Basin include Occidental, Apache, ExxonMobil, and Concho Resources. Western, in fact, attempted to acquire Anadarko before Chevron seal the deal. But Occidental can now find himself in the crosshairs of a larger player who wants to throw up his Permian portfolio.

Other major manufacturers in Permian include ConocoPhillips, EOG Resources, Pioneer Natural Resources, Noble Energy, Devon Energy and Diamondback Energy, which acquired the co-Permian manufacturer Energen Corporation in 2018). These companies can be targeted by Supermajors, or they may seem to target smaller Permian manufacturers such as WPX Energy, Parsley Energy or Cimarex Energy.

Which companies can be next in the Permian acquisition list? And who could be interested in making acquisitions? I will compare and contrast them in the next article.


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