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Signage is displayed at a Chevron Corp. gas station in El Segundo, California, U.S., on Monday, April 27, 2020. Chevron is scheduled to release earnings figures on May 1.
(Bloomberg) -- Chevron Corp. offered to buy the shares in pipeline operator Noble Midstream Partners LP that it doesn't already own for about $422 million in a deal that would streamline what's already a tightly integrated relationship.
Chevron is the majority owner of Noble Midstream with a 62% stake following last year's acquisition of Noble Energy Inc. The California-based oil giant is also the pipeline company's largest customer.
Chevron said Friday the all-stock transaction values Noble Midstream at $12.47 per common unit, matching Thursday's closing price.
The units were 2.4% higher at $12.77 at 8:30 a.m. in pre-market trading in New York. The market is focused on the recent precedent of other pipeline limited partnerships getting premium offers "to get transactions across the finish line," analysts at Tudor Pickering Holt & Co. said in note. They cited the example of Canada's TC Energy Corp. which agreed in December to acquire the shares it doesn't already own in its U.S. unit for $1.68 billion. That deal had an announced premium of 15%, according to data compiled by Bloomberg.
Noble Midstream provides crude oil, natural gas, and water-related midstream services and owns equity interests in pipelines in the DJ Basin in Colorado and the Delaware Basin, which is part of the larger Permian Basin that straddles Texas and New Mexico.
Any agreement will be subject to negotiations and approval by Noble Midstream's board of directors.
(Updates with analyst comment in fourth paragraph)
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