Analysts: Chevron’s acquisition of Noble could buoy oil and gas activity in Weld County - Loveland Reporter-Herald

cicingwos.blogspot.com

An energy analyst and Chevron Corp.’s CEO both believe the company’s announced acquisition of Noble Energy Inc. could position the local industry for a rebound in activity next year.

Chevron announced its intention to buy Noble on Monday in an all-stock deal valued at $5 billion, the first major acquisition in the industry since the dual whammies of a global price war between Saudi Arabia and Russia and the widespread drop in travel due to the coronavirus pandemic torpedoed oil prices.

Noble is the state’s second-largest oil producer, with 30.91 million barrels of oil and 215.18 million metric cubic feet of natural gas extracted out of Weld County last year, according to Colorado Oil and Gas Conservation Commission data.

The drop in oil prices has forced producers to cut rig activity, lay off workers and, in the case of Extraction Oil & Gas Inc. and Whiting Petroleum Corp., file for Chapter 11 bankruptcy protection.

Oil production as a whole dropped 56% in Weld County from March to April, while about 6,000 wells were stopped in the period as the commodity no longer commanded profitable or break-even prices.

Bernadette Johnson, a vice president of analytics at Enverus, said she expects rig count and activity from operators to start rebounding once oil hits $50 a barrel, but Chevron could fuel a larger rebound than Noble because of its sizable amount of capital to deploy.

“Weld County could see even more opportunity arise out of Chevron than Noble,” she said. “Look for Chevron to flex its scale and add operations if WTI (West Texas Intermediate crude) prices get back above $50-$55 per barrel.”

Many analysts believe oil prices could recover in early 2021, pointing to prices floating up and down with the rest of the markets on any news of a COVID-19 vaccine breakthrough and the implication that a vaccinated global population would be more willing to travel and consume fuel.

However, Enverus senior analyst Andrew Dittmar said the all-equity offer and relatively low premium offered to take over Noble appears to show that Chevron may not be as bullish as one expects out of a company looking to acquire.

“This deal reflects Chevron’s cautious outlook as well,” he said.

Chevron doesn’t appear to view Colorado’s ongoing reform of oil regulations to be a major threat to its viability in Weld County, even though local oil executives and advocates believe Senate Bill 181 is a bigger threat to the local industry than the economic damages of COVID-19.

In response to an analyst’s question during a conference call this week, Chevron CEO Michael Wirth said Noble’s position in the Denver-Julesburg Basin and its support from Weld County have already shown its ability to handle the regulations put in place by the sweeping reform bill.

“It’s further from the populated areas in some of the incorporated cities that have been a little more strident on this issue,” he said. “So, it’s a risk that needs to be managed, but I think it’s one that’s been managed well, and we will continue to uphold that.”

Chevron and Noble expect to produce $300 million in saved costs with the combination, but Johnson thinks the majority of those savings will come from administrative jobs instead of field workers.

“This has implications for overall combined headcount, but the field offices will likely remain,” she said.

Noble has field offices in Greeley and Denver. The company did not respond to a BizWest request for comment on current plans for employee numbers and office presence in the area.

© 2020 BizWest Media LLC

Let's block ads! (Why?)

"activity" - Google News
July 24, 2020 at 06:06AM
https://ift.tt/32QYQyW

Analysts: Chevron’s acquisition of Noble could buoy oil and gas activity in Weld County - Loveland Reporter-Herald
"activity" - Google News
https://ift.tt/3ddCXMh
https://ift.tt/2WkO13c

Bagikan Berita Ini