(Reuters) - Chevron Corp said on Friday it offered to buy shares in Noble Midstream Partners LP that it does not already own, in a deal valuing the company at $1.13 billion, months after the U.S. oil major bought the pipeline operator’s sponsor, Noble Energy.
Chevron, the second-largest U.S. oil producer, in October closed a $4.1 billion all-stock purchase of smaller rival Noble Energy, gaining a nearly 63% stake in Noble Midstream alongside large shale and international natural gas reserves.
The U.S. oil giant said it had offered to buy the rest of Noble Midstream at $12.47 per common unit, in line with its closing price on Thursday.
Noble Midstream’s units rose more than 6% to $13.13 in early trade on Friday, slightly above the offer price.
While this consolidation was the most likely outcome after Chevron’s Noble Energy takeover, the market is likely to focus on previous similar deals that required premiums to get over the finish line, Tudor, Pickering, Holt & Co analysts wrote in a note.
Noble Midstream’s investors, however, should not expect a sweetened bid or a competitive offer because Chevron owns its parent, said Ethan Bellamy, managing director of midstream strategy at East Daley Capital Advisors.
“We expect the transaction to be consummated expeditiously, without regulatory impediments,” Bellamy said.
San Ramon, California-based Chevron, which is now Noble Midstream’s largest customer, said taking full ownership of the assets will help it streamline their governance.
“The transaction’s biggest benefit to Chevron is to simplify its corporate entity,” said Rob Thummel, energy portfolio manager at Tortoise Capital.
Infrastructure assets also give steadier, more stable cash flows than oil drilling businesses, Thummel said, noting that midstream cash flow is based on the volume of products moved on Noble Midstream’s network.
The pipeline operator provides crude oil, natural gas and water-related gathering, processing and transportation services in the DJ Basin in Colorado and the Delaware Basin in Texas.
Any deal agreement is subject to talks and will need Noble Midstream board’s approval, Chevron said.
Reporting by Shariq Khan in Bengaluru; Editing by Maju Samuel and Sherry Jacob-Phillips
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