Dear Noble Energy shareholders, Chevron is about to take you for a ride
You’ve had a good ride; a great one actually. Your investments in the Israeli gas fields have paid off super handsomely. And now Chevron is acquiring you for $5 billion, plus assuming over $8 billion of your debts.
But just as the deal you’ve managed to swing with the Israeli government and energy market runs counter to the economic, environmental, health and energy security interests of Israeli citizens, Chevron is about to take you for a ride. If you take their deal, you lose. And so does the State of Israel, to whom you actually owe some gratitude and humility.
Chevron, in announcing the acquisition, said, “Noble Energy brings low-capital, cash-generating offshore assets in Israel, strengthening Chevron’s position in the Eastern Mediterranean.” This is because the price charged to the State of Israel for its own gas is nearly three times the global average, and twice the cost of solar energy plus battery storage. And you, along with your nearly bankrupt buddy Yitzhak Tshuva, haven’t delivered much on the promised sovereign wealth fund even though you’ve enjoyed the profits from inflated gas prices all these years.
The Chevron deal is bad for you as investors and great for Noble Energy management, who behave in Israel like they own the joint. Now they are working their powers of persuasion to convince you the Chevron deal is in your best interests.
Reject the Chevron acquisition offer; they are short-changing you, and only giving you shares in a sinking business. Are you fully aware of Chevron’s environmental record and their $9.5b judgement in Ecuador for the “Chernobyl of the Amazon?” Traditional oil companies are overburdened with what will be stranded assets, as the world continues to battle Corona, adopt more Green Recovery deals, and impose carbon taxes. While Chevron is valued today at a whopping $155 billion – down $10 billion just this week — their valuation is subject to wild fluctuations, like when in March, due to Corona, it lost nearly half its value.
Your management has decided to treat citizens of Israel who have reasonable concerns as the enemy
Management knows the good times are about to end and they are desperate to get their payout against a ticking clock. Consider the following: Likely regime-change in America that is climate-friendly and that will have ripple effects globally; the looming end of the Netanyahu era in Israel and the generous political and financial benefits he bestowed on the gas industry; your partner Yitzhak Tshuva’s waning political clout since he is on the verge of wiping out significant pension value for ordinary Israeli citizens; the growing hostilities with Iran, which make the rig off the shores of Zichron Yaakov a potential Hezbollah missile target. And there’s the possibility more information could become public regarding key decisions on your sweetheart gas deal, including how the rig came to be placed 10 kilometers offshore instead of the originally approved 200 kilometers.
Chevron faces some hurdles in order to acquire your Israeli assets and they are only getting higher. The entrance ticket to a vote of our Petroleum Council will be a public hearing on Chevron’s environmental record, with guest appearances by affected communities from oil spills in Ecuador, Nigeria and California. It won’t be pretty and will carry significant local and international media coverage. The hearing won’t do any wonders for Chevron’s stock price, which they are dangling in front of you to grab before its value goes down again.
The environmental community has some reasonable recommendations to make to you that, if implemented, may actually help your valuation and reduce your need to take a below-market offer from Chevron. But your management has decided to treat citizens of Israel who have reasonable concerns as the enemy to be financially bilked for as long as needed until management can receive their exit bonuses.
Chevron will either over-react to the call for a public hearing in Israel or walk away from the deal, which is starting to cost them in brand equity at a fragile economic time. We’re open to a conversation. If not, it’s your loss.
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Maya Jacobs serves as CEO of Zalul Environmental Association. Yosef I. Abramowitz is co-founder of the solar industries in Israel and Africa and named by CNN as one of the six leading Green Pioneers worldwide.
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