By Kevin Crowley on 4/12/2019
HOUSTON (Bloomberg) — At $33 billion, Chevron’s acquisition of Anadarko Petroleum is something of a bargain, according to investors.
The $65-a-share offer for Anadarko represents a 39% premium to Thursday’s price, but the stock traded at about $77 less than a year ago. The deal values Anadarko at only about 7.5 times its earnings, compared with an average of 8.9 for comparable deals, data compiled by Bloomberg show.
“I don’t necessarily feel like they overpaid even with the premium embedded in the deal,” said Noah Barrett, who helps manage $328 billion at Janus Capital Management in Denver. Chevron is “getting good assets at a fairly reasonable price.”
Like other U.S. explorers, Anadarko had been punished by investors for participating in a shale boom that has delivered record crude production but little in the way of cash returns. Its wide range of assets from the Permian basin to the Gulf of Mexico and Mozambique left investors exposed to a multitude of risks in the global oil market. Its Colorado operations, meanwhile, were devalued due to a state crackdown on oil and gas drilling.
“Chevron pulled off something of a steal acquiring Anadarko at the price they did,” said Michael Roomberg, a fund manager at Miller/Howard Investments which manages $5 billion including Anadarko stock. “Chevron really took advantage of the market.”
Occidental Petroleum made a $70/share offer for Anadarko, according to a person familiar with the matter. But the deal would have been tougher for Occidental to pull off than for Chevron given its smaller size.
“You always want to get the highest price for your assets,” said Barrett of Janus, which also owns Anadarko shares. “But from a risk-weighting perspective the Chevron deal might have been more attractive.”
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