The United States’ second-biggest energy company, Chevron, announced its agreement Monday to buy Houston-based hydrocarbon exploration firm Noble Energy for $5 billion. 

The California-based firm said in a statement that it will acquire all of the shares of Noble Energy in an all-stock transaction valued at $10.38 per share with Noble Energy shareholders receiving 0.1191 shares of Chevron for each Noble share.

Based on Noble Energy’s proved reserves at the end of 2019, the deal will add approximately 18% to Chevron’s year-end 2019 proved oil and gas reserves at an average acquisition cost of less than $5 per barrel, according to the statement.

“The acquisition of Noble Energy provides Chevron with low-cost, proved reserves and attractive undeveloped resources that will enhance an already advantaged upstream portfolio,” the statement read.

It added that “Noble Energy brings low-capital, cash-generating offshore assets in Israel, strengthening Chevron’s position in the Eastern Mediterranean.”

The transaction has been unanimously approved by the boards of directors of both companies, and is expected to close in the fourth quarter of 2020.

Noble Energy has assets in the DJ Basin in the US state of Colorado, in the oil and gas resource-rich Permian Basin in the states of Texas and New Mexico, as well as resources off the coast of Israel in the Eastern Mediterranean, and Equatorial Guinea in West Africa.

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