New York- Chevron CEO Michael Wirth isn’t a fan of bidding wars.
Last year, Wirth wisely walked away when smaller rival Occidental Petroleum (OXY) swooped in to outbid Chevron for shale driller Anadarko Petroleum in a deal worth $58 billion.
The experience paved the way for Chevron to announce a less risky but still major deal this week: It will buy oil-and-gas company Noble Energy (NBL) for $13 billion, in the biggest energy takeover since the pandemic that set off chaos in the industry.
The Anadarko episode helped shape the decision to make a play for Noble Energy now, Wirth told CNN Business in an interview.
“[It] reinforced our existing commitment to discipline, focusing on value creation and understanding risk,” the Chevron CEO said. “We’re not going to chase value.”
But don’t call it a bidding war.
“We never got into a war. The other party (Occidental) actually bid against themselves multiple times,” Wirth said. “The war wasn’t with us. It was within.”
With the benefit of hindsight,
Occidental’s takeover of Anadarko — the second-biggest ever by a US oil-and-gas company — looks ill-timed. Oil prices crashed, leaving Occidental scrambling to repay the pile of debt it took on in the deal. Occidental slashed its dividend by 99% to a penny a share, made deep cuts to its budget and enforced pay cuts for executives and workers.