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Will Chevron’s Anadarko “Pass” Produce Capital Discipline For Shareholders?

By John F. Heerdink, Jr.
Recently, Occidental Petroleum Corp with the financial assistance of $10 billion from the billionaire investor Warren Buffett overtook Chevron’s takeover bid for Anadarko Petroleum Corp at $38 billion (£29.17 billion). Chevron refrained from raising its initial offer after Occidental’s $76 per share bid proposal surfaced as Anadarko’s board considered it a better offer. Anadarko’s major assets seemed to be a rational fit for Chevron. However, Chevron, CEO Mike Wirth stated “Make no mistake. We have the financial capacity to outbid Occidental, but we concluded that an increased offer would have eroded value to our shareholders, and it would have diminished returns on capital,” “The bar is high. We don’t have a need to do anything. We are not desperate to do a deal.” as per reports. The U.S. oil and gas mergers and acquisitions experienced the worst 10-year low in the first quarter as investors sold shares of the company who spent more on drilling and not paying back the dividends. Investors defined Capital Discipline for Chevron to be where they should spend 4 percent a year on production and an equal amount should be paid as a dividend. Anadarko expects the merger with Occidental to be completed in the second half of the year. Dow 30 component Chevron Corporation (CVX), through its subsidiaries, engages in integrated energy, chemicals, and petroleum operations worldwide. The company operates in two segments, Upstream and Downstream. The Upstream segment is involved in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as operates a gas-to-liquids plant. The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil and refined products; transporting crude oil and refined products through pipeline, marine vessel, motor equipment, and rail car; and manufacturing and marketing commodity petrochemicals, and fuel and lubricant additives, as well as plastics for industrial uses.  The company was formerly known as ChevronTexaco Corporation and changed its name to Chevron Corporation in 2005. Chevron Corporation was founded in 1879 and is headquartered in San Ramon, California.   To learn more about Chevron (CVX) and to track their progress please visit the Vista Partners Chevron Page.
Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives. Stay Informed! Stay Competitive! Join us at Vista Partners! It’s FREE to receive email updates.

Chevron drops Anadarko takeover battle after Occidental raises bid

Chevron Corp abandoned its takeover bid for Anadarko Petroleum Corp on Thursday, outmanoeuvred by Occidental Petroleum Corp’s higher, $38 billion (£29.17 billion) offer that included more than three times as much cash. With a financing assist from billionaire investor Warren Buffett, Occidental,..
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