HOUSTON — In the first big deal since oil prices crashed four months ago, Chevron agreed on Monday to buy Noble Energy for roughly $5 billion in what many experts consider the beginning of a sweeping consolidation in the U.S. oil industry.
The coronavirus pandemic has caused a sharp decline in oil demand, putting intense pressure on oil companies with large debts. This includes Noble, which is based in Houston and has operations in Colorado, Texas, the eastern Mediterranean and West Africa.
But it has also created an opportunity for oil giants to gobble up smaller fish and extend their acreage in places like the Permian Basin, which straddles Texas and New Mexico. Chevron, for one, already has a large presence in the basin and easy access to large pipeline networks, which should help the company put Noble’s assets to good use.
“In a downturn like this, the strong get stronger and the weaker players try to survive as best they can, and some will be bought,” said Duane Dickson, Deloitte’s vice chairman and U.S. oil, gas and chemicals leader. “There will be some bankruptcies and mergers and acquisitions like you saw today and I would expect that will continue and potentially pick up speed.”