Shares of Noble Energy Inc. rose 8.8 percent on Monday’s premarket after Chevron Corp. confirmed a deal to buy the oil and gas producer for about $5 billion.
Including Noble’s debt, the deal would be valued at $13 billion. The deal was previously reported by The Wall Street Journal. Chevron shares fell 0.1% before the open because of it. Under the terms of the deal, Chevron will exchange 0.191 shares of Chevron stock for every outstanding share of Noble stock. Based on Friday’s closing price, Noble shares would be worth $10.38, or a 7.6% premium.
“This is an economic opportunity for Chevron to acquire additional proved reserves and resources,” said Chevron Executive Director Michael Wirth. “Noble Energy’s multi-asset, the high-quality portfolio will expand geographic diversity, increase capital flexibility and improve our ability to generate strong cash flow.”
Since the beginning of the year, Noble Energy shares have fallen 61.1% and Chevron shares are down 27.7%, while the Dow Jones Industrial Average is down 6.5%.