The all-stock takeover values Noble at $10.38 a share or 0.1191 Chevron share, according to a person familiar with the matter. That would represent a roughly 7.6% premium over Noble’s Friday closing price of $9.65 and nearly 12% based on a 10-day average. Including Noble’s hefty debt load, the deal would be valued at roughly $13 billion.
Noble, based in Houston, is an independent oil-and-gas producer with U.S. and international operations. Buying the company would expand Chevron’s presence in the DJ Basin of Colorado and Permian Basin, which spans West Texas and New Mexico. It would also give San Ramon, Calif.-based Chevron, which has a market value of $163 billion, assets in the eastern Mediterranean and West Africa and yield potential annual cost savings of $300 million, the person said.
It would be one of the first signs of life in energy-sector deal-making since oil prices plummeted in March as a result of widespread shutdowns and travel bans. Futures contracts for West Texas Intermediate—the U.S. bellwether—briefly entered negative territory in April. While prices have partly recovered and stand at about $40.47 a barrel, the sudden crash sent several energy companies spiraling downward.
More than 20 North American oil producers have filed for bankruptcy this year, according to law firm Haynes & Boone LLP, and dozens more are expected to follow suit if oil prices stay around current levels.
Small and midsize oil-and-gas companies have performed poorly in recent years and faced investor pressure to slow growth and deliver more consistent profits and cash flow. That has fed expectations of a potential wave of mergers as stronger players snap up weaker rivals.
Noble is Chevron’s first big strategic move after walking away from a high-profile bidding war for Anadarko Petroleum Corp. last year. Chevron was outbid by Occidental Petroleum Corp., which paid roughly $38 billion for Anadarko with help from Warren Buffett. Occidental has been languishing under a roughly $40 billion debt load, which it has been taking steps to lessen.
The two rivals had coveted Anadarko’s assets in the heart of the oil-rich Permian. After Occidental’s offer was deemed superior, Chevron Chief Executive Mike Wirth said his company opted to accept the $1 billion termination fee rather than make a higher offer, citing a focus on discipline.
Major oil companies have been eyeing increased acreage in the Permian, partly because its geology makes it one of the least expensive places in the U.S. to produce oil via fracking. Production in the area was booming and helped lift U.S. crude production to record levels before the pandemic shriveled global demand for oil by more than 20% this spring.
—Christopher M. Matthews contributed to this article.