Chevron Corp abandoned its takeover bid for Anadarko Petroleum Corp on Thursday,...
HOUSTON - Chevron Corp abandoned its takeover bid for Anadarko Petroleum Corp on Thursday, outmaneuvered by Occidental Petroleum Corp’s higher, $38 billion offer that included more than three times as much cash.
Chevron declined to raise its initial offer after Occidental boosted the cash portion of its $76 per share bid and Anadarko’s board deemed it a superior offer. Chevron, the No. 2 U.S. oil producer, stands to receive a $1 billion breakup fee, which it said it will apply to a $5 billion share repurchase program this year.
“Make no mistake. We have the financial capacity to outbid Occidental, but we concluded that an increased offer would have eroded value to our shareholders, and it would have diminished returns on capital,” Wirth said. “The bar is high. We don’t have a need to do anything. We are not desperate to do a deal.”
Anadarko’s major assets - in U.S. shale, the Gulf of Mexico and an liquified natural gas project in Mozambique - were seen as a logical fit for Chevron, but not something the company needed. “Chevron has no objective need to acquire Anadarko - or, for that matter, engage in any other large-scale ,” said Pavel Molchanov, an analyst with Raymond James.FILE PHOTO: Anadarko Petroleum Corporation is seen in The Woodlands, Texas, U.S., April 30, 2019.
The contest for Anadarko underscored the value of its assets in the Permian Basin, the vast shale field with oil and gas deposits that can produce supplies for decades using low-cost drilling techniques. Chevron holds 2.3 million acres in the Permian Basin and has vast mineral ownership there, which reduces its royalty rate. It expects shale production from the basin to reach 600,000 bpd by the end of next year, and 900,000 bpd by the end of 2023.It got a $10 billion investment from Warren Buffett’s Berkshire Hathaway Inc and struck a deal with French oil giant Total SA to take most of Anadarko’s international assets, including a liquefied natural gas project in Mozambique.
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