Good morning. My name is Crystal, and I will be your conference facilitator today. Welcome to Chevron's conference call to discuss its announced acquisition of Noble Energy. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer session and instructions will be given at that time.
As a reminder, this conference call is being recorded. I will now turn the conference call over to the General Manager of Investor Relations, Chevron Corporation, Mr. Wayne Bordoon. Please go ahead.
Thank you, Crystal. Welcome, and thanks to everyone on the call for participating this morning. I'm Wayne Bordoon, General Manager of Investor Relations. With me today are Chevron's Chairman and CEO, Mike Wirth Noble Energy's Chairman and CEO, Dave Stover and Pierre Breber, our CFO. Before we get started, please be reminded that this presentation contains estimates, projections and other forward looking statements.
Please review the cautionary statement and important information for investors and stockholders on Slide 2. Now I'll turn it over to Mike.
All right. Thanks Wayne. Moving to Slide 3, I'm pleased to announce that Chevron has entered into a merger agreement with Noble Energy, an opportunity aligned with our disciplined returns focused strategy. This is an attractive transaction that strengthens Chevron's performance through high quality cash producing assets that are complementary to Chevron's global portfolio and capabilities, low cost proved reserve and resource additions and achievable synergies that we expect to drive accretive financial metrics and enhance our flexible capital program. Moving to Slide 4, I'd like to highlight some of the key terms that make this compelling deal for shareholders of both companies.
Each Noble Energy shareholder will receive 0.1191 Chevron shares as total consideration. They'll have continued investment in the business through ownership of shares with a 6% dividend yield, underpinned by balance sheet strength in a time of uncertainty. Chevron shareholders should realize the incremental value that we expect the high quality assets and synergies to deliver over time. Turning to Slide 5. The value of this deal is supported by the complementary nature of Noble Energy's core assets in the U.
S, a liquids weighted portfolio focused in the DJ and Permian Basins, assets that play to our strengths, where we believe we're uniquely positioned to maximize value. The Permian is a targeted bolt on to our premier existing position, adding 92,000 net acres in the core of the Delaware Basin. Adjacent to our existing footprint, this will add long lateral well opportunities and allow for efficient development synergies with our existing acreage. Colorado, the DJ has a large contiguous position with no leasehold drilling requirements, where Noble Energy has been a very successful operator. We intend to leverage our proven factory model with Noble's strong experience there to drive further efficiencies and deliver superior results.
Also, we'll add an established midstream business that is closely linked to Noble's Permian and DJ assets and a more mature Eagle Ford position. Turning to the next slide in the international portfolio. Noble Energy's large operated position in the Eastern Mediterranean has established them as a leading player in the region. Anchored by the Leviathan and Tamar assets supported by offtake agreements from Israel, Egypt and Jordan, these assets are expected to generate strong cash flow for decades. The opportunity in the region isn't limited to current operating assets.
Noble Energy adds to our exploration portfolio in the Eastern Med, which pending final government approval is expected to give Chevron a total of 6 exploration blocks in Egypt and a discovered resource opportunity in Cyprus. Moving to West Africa, Noble Energy has had an established position in Equatorial Guinea for decades with opportunities to continue to monetize resources through existing regional capacity. Turning to Slide 7. Noble Energy's assets further strengthen our already advantaged portfolio. The Eastern Mediterranean enhances our geographic diversity and the U.
S. Onshore and West Africa add to regional strength in both areas. With about 2,000,000,000 barrels of proved reserves, the acquisition is an attractive opportunity to add to Chevron's reserves cost efficiently and in assets that require limited near term capital. Turning to synergies on the next slide. We expect to deliver $300,000,000 in before tax run rate cost reductions within a year of closing, which is expected in the Q4.
These cost synergies result primarily from redundant activities in corporate functions, businesses where operations overlap and high grading opportunities within our combined exploration portfolio. Both companies have reduced capital significantly this year. Future capital levels will depend on market conditions. Our capital program will continue to have the flexibility to stay low and to gradually ramp back up when prices and demand suggest it's prudent to do so. Strong synergies on top of robust cash generation with capital flexibility is the right combination that we expect to deliver additional free cash flow and value to our shareholders.
Moving to the final slide, I want to return to some of the messages that we delivered at our Investor Day in March. Business environment around us has changed, but our value proposition hasn't. We've always said that we have a high bar for M and A, and this transaction clears those hurdles. We expect Noble Energy's financials to be accretive and for their projects to compete for capital in our returns focused portfolio. We're adding low cost reserves and resources.
And even with the additional debt, we're maintaining a strong balance sheet. And finally, we expect the assets to generate solid cash flow with minimal capital requirements with the option to increase investments when the world demands more energy. Over the coming months, we expect to implement our integration plan with Noble's employees, who we know share a commitment for strong performance and getting results the right way. Values ingrained in both our cultures. With that, I'll turn it over to Dave to make a few remarks.
Thank you, Mike, and good morning, everyone. It's a pleasure to join the Chevron team to announce this exciting combination. As you all know, Noble Energy is a leading independent E and P company with a strong U. S. Onshore portfolio, world class international assets and significant exploration opportunities.
Let me take a moment and talk for a moment about why we believe this is the right transaction and at the right time for Noble Energy. During the last few years, we made tremendous progress on our strategic objectives, including driving commencing production at the world class Leviathan field and significantly reducing our cost structure. At Noble Energy, we're always looking for ways to maximize value. As such, the Noble Energy board and management team conducted a thorough process supported by advisors to carefully review and consider a wide range of strategic alternatives. In addition to this merger, we assessed other potential options, including alternative mergers, acquisitions and divestitures, as well as the continued execution of our standalone plan.
The Board and management team determined that the merger with Chevron was the superior to deliver value to our shareholders. Chevron's global scale, diversified portfolio and financial strength will ensure the value of Noble Energy's assets is maximized. We also believe Chevron is an excellent cultural fit for Noble Energy with a shared commitment to integrity and respect for our communities and the environment. Noble's shareholders the transaction gives our shareholders the opportunity to benefit from Chevron's attractive dividend and participate in the powerful upside potential of the combined Before I turn the call back over, I'd like to thank all of our employees for their dedication and commitment to Noble Energy. This transaction is a testament to their dedication and hard work.
I'm confident that the future is bright for Noble Energy and Chevron.
With that, I'll turn the call over to Wayne.
Thanks, Dave. That concludes our prepared remarks. We're now ready to take your questions. Keep in mind that we do have a full queue, so please try to limit yourself to one question and one follow-up if necessary. We'll do our best to get all of your questions answered.
Crystal, please open the lines.
Thank And our first question comes from Neil Mehta from Goldman Sachs. Your line is open.
Hey, Dave and Mike, congratulations here on the transaction. I guess the first question was just around $300,000,000 pretax number. Mike, can you help to flush out any of the drivers behind that? And then any thoughts on NBLX as well from the midstream perspective and how we should be thinking about that?
Yes, Neil, good morning and thanks for your words. Look, the synergies will be partially headcount related as we've got some redundancies in exploration portfolio, other third party costs, exploration portfolio, other third party costs, consultants, office buildings, IT, lower insurance, things like that. So we think these are very achievable numbers. I think both companies have been very committed to operating cost discipline and have efforts underway to reduce those costs. And we see the opportunity here to accelerate that even further.
We haven't had a chance to get into things like the supply chain to look for procurement efficiencies and other things, but I'm sure we'll see some of those as well. So we think this is a very achievable number. We've laid it out for a run rate in 1 year. We'll work hard to deliver that and hopefully do better than that. On the midstream, look, this is a good midstream business that is tightly integrated with the production operations in both the Permian and the DJ.
And it's important for the efficient development of those areas. And so we look forward to bringing that in and leveraging that up with our assets in the Permian and learning more about how it supports the DJ as we get into that. So a good part of the business.
Thanks, Mike. And I know we'll get a little bit more on in the S-four here, but can you or Dave talk more about how the transaction came together. And then I guess the question for Dave is, it was a relatively low premium transaction recognizing there's an equity component to it. So how do you get comfortable around the valuation?
Yes. So I'll just make a quick comment and then let Dave comment. You're right, Neil. All the details will be in the S-four registration when it gets filed here shortly. And so I'll just let you read the story of how it happened there.
And from our point of view on premium, the best deals are fair to both sides. And our board saw this as a deal that was good for our shareholders and Dave's board saw the same and that's how good deals get done. We really look at value creation in the long term and we think this is good value for both sides. Dave, I'll let you respond to this.
Yes, I appreciate it Mike. I think that was well said. I think as we had the chance to work with Mike's team, we got more and more comfortable. And I think some of the things that we learned, it wasn't just the assets, it wasn't just the execution, but it was the overall fit of the 2 companies, the cultural aspects, how we make decisions, how we think about not just the short term, but the long term. And I think when you're making a decision like this, you're looking at what's going to create the most value for your assets over time and the ability to look at this from the standpoint that the scale really matters here as you go forward.
And the broader capabilities that Mike and his organization bring to this, the financial strength, commitment to shareholder return, all those things are going to continue to unlock value in these assets through decades here. So the way we looked at it in a stock for stock transaction, it maintained the upside exposure and minimized any downside risk. So I think all of those things are important as you think about something like this.
Thanks, Kefka. Thanks, Neil. Next question? Thank you.
Our next question comes from Phil Gresh from JPMorgan. Your line is open.
Yes. Hi, good morning and congratulations. Yes, I had two questions. First one, I guess for Mike, does Chevron own the minerals underneath the Noble acreage in the Permian? And as you look at Noble's current plan with 1 rig, I believe, running the DJ and none in the Permian, Perhaps you could talk about how you view the ability to efficiently integrate those assets into what you're doing today in the Permian?
Yes, Phil. So no, we own extensive mineral interest in the Permian. We don't own minerals under the acreage in Reeves County that Noble Energy has. In terms of the plan forward, we were running a couple of rigs down in Reeves before the downturn. We've got a good position.
It will be much better as we combine the acreage here. And it was very competitive within our portfolio. It will get even better here as we have a deeper inventory of long lateral wells and contiguous development areas and can develop both surface infrastructure as well as the well program in a very capital efficient manner. So that will go into our normal prioritization process. And as I said earlier, the market is not calling for more production right now, which is why we've exercised the flexibility in our capital program to bring these activity levels down.
We'll bring that activity back up when we see the indicators that suggest it's appropriate to do so. I'd encourage you to think of the DJ as a more mature version of some of our other shale and tight positions, right? So we talked a lot we've talked a lot about the Duvernay in Canada, the Vaca Muerta in Argentina, where we're early in cycle. Noble has de risked the DJ, strong current production understands the geology, really good acreage in the rural areas of primarily Weld County. And so that too will come into our overall unconventional portfolio and be prioritized for capital as we go forward with a good understanding of the opportunity and a strong track record there.
Okay. Maybe it sounds like you had
a second question perhaps for Dave.
Yes, actually exactly. As we think about the managing of the risk side of the equation that you mentioned, Dave, One of Noble's larger customers in the Eastern Mediterranean has the ability to reduce its volume take by, I believe, up to 50% if Brent prices are below 50%. So I guess, perhaps you could talk about your view on that situation right now given the near term gas demand picture in the Eastern Mediterranean?
Yes, absolutely, Phil. As we've talked about, we've had great support even through this downturn, if you will, the COVID impacts of things. And we're at the place now where we're getting ready to finish up this compression project that will start to have the ability to move more gas through the region and especially into Egypt like you're talking about. So everything we've seen and so forth, everybody is gearing up and ready now to start to move more gas through there. And so I think we're in a really good place.
And it's a really
world.
Okay. Thank you. Thanks, Phil.
Thank you. Our next question comes from Doug Leggate from Bank of America Securities. Your line is open.
Thanks guys. I appreciate you taking my questions. And again, let me add my congratulations. So one for Dave and one for Mike, if I may. Mike, first of all, I know again we're going to get details in the S-four, but can you share any details on the breakup fee?
And if I may, you've obviously been through this before with Anadarko. I'm just curious given the modest premium, how you expect the market to react and whether in the event that there was another situation to evolve, where you would stand in terms of whether the upside potential would justify you taking a harder look at the offer terms?
Yes, Doug. Look, this is a public company merger. It's similar to other public company mergers and the details including the particulars on a breakup fee will be in the filings when those are made. So I'll just refer you to those. Look, as far as the reference to potential interloper risk, we do deals that are fair to both sides.
Both boards strongly support this, unanimously support this, and we're very confident that the deal will close.
Thank you for that. Dave, you've just gone through several years developing a world class asset. The synergies alone, $300,000,000 if I simplify that on an annuitized basis post 2021, that's worth 50% more than your stock price, dollars 5 a share. There's a lot of other regional LNG players or those who already have assets in the region. I'm just trying to understand why you're selling now and why you're selling at this valuation?
Well, I think Doug it gets back to the things I talked about earlier that for the right opportunity with the right partner, if you will, that you look at how do you create the most value for your assets long term. And I think when you look at the financial strength now of this combined company, the broader capabilities to bring to that asset base, I think we looked at it as an opportunity over the long term just to create more value and actually enhance additional opportunities going forward. So I think as Mike said, it's something that both companies support and look at from a standpoint of create the most value and types of things this industry needs to be doing.
Thank you for taking my
answers guys.
Good luck. Thanks Doug.
Thank you. Our next question comes from Jeanine Wu from Barclays. Your line is open.
Hi, good morning everyone.
Good morning Jeanine.
My questions are for Mike and maybe just following up on Phil's questions. I was just wondering if you could provide your view of natural gas supply demand in the Eastern Med. And I guess my follow-up would be what specific LNG opportunities do you see in the region either on a brownfield or a greenfield or both?
Yes. So, Janine, look, the Eastern Med is proving to be really quite a prolific hydrocarbon basin and Noble was right there at the very beginning and made some bold moves to make early discoveries and take the risk to begin to commercialize the resource. And so they've got a great position, a lot of great knowledge. And demand for gas in the Eastern Med region as well as more broadly continues to grow. It's widely, I think, acknowledged that it's a fuel that will continue to displace coal for power generation.
And as economies grow in that region and beyond, we think that the demand will continue to support further development. In terms of LNG, look, there's idle there's some idle LNG capacity in Egypt right now that can leverage this as feed gas. There's been some ongoing discussions and in fact announcements here over the last day or 2 about the desire or the intent to establish pipe capacity into the European markets. And I think when you've got a large low cost resource base like this proximate to large economies, we will find ways to move the gas to market in a manner that's competitive. And so obviously commercialization of that will be a very important activity.
It's something that we do around the world with many different customers in many different countries and in many different modes of transportation. So this fits in with strong capabilities that we have and we just see it as a very important resource for the future of the region.
Great. Thank you very much.
Thanks, Janine.
Thank you. Our next question comes from Jason Gammel from Jefferies. Your line is open.
Thanks very much and congratulations everyone. Maybe just taking a step back Mike, can you talk about with all the opportunities that are out there and available right now? What led Noble to the top of your list in terms of the transaction that you wanted to pursue?
Sure. I mean, Jason, I've tried to be pretty consistent on this question as it gets asked over time. At the top of the list are quality assets. And we've got a pretty high bar for what that looks like, including the ability to compete for capital within our portfolio against what's already a strong set of assets. We're very focused on low cost of supply, because we believe through the cycles, you absolutely have to have low supply costs.
We've shifted our portfolio towards one with a more flexible capital component. So that as we experience the market cycles, we have a greater ability to respond to those with flexible capital. Obviously, we've talked about a culture fit and I have to tell you it's very strong, many attributes, purpose, values, commitment to safety, a number of the things that Dave spoke about. And then you've got to find a meeting of the minds on value and forward strategy and a company that is prepared to talk about a combination. So I guess the last thing I'll say is, we get asked a lot about pure play Permian.
And we're already big in the Permian and getting bigger isn't necessarily the goal, getting better certainly is important. And so the fact that this brings with it a strong position, a very strong position in the Eastern Med, a basin where we've got attractive exploration opportunities and Noble has a strong currently producing asset with the big capital spend behind it now. It just gives us a really solid position in another basin that helps improve portfolio diversity and mitigate risk. So this deal ticks all the boxes that we have consistently articulated as the kinds of things that we would be looking for and we're very excited. We think it's a good deal for the shareholders of both companies.
That's really helpful, Mike. Maybe I could just follow-up with the reference to the $40 Brent price needed for accretion on this deal. Anything specific underlying assumptions that you can provide detail on that get you to that number?
Jason, this is Pierre. No, we're just using something that's kind of near where the strip is trading right now.
Okay. Anything on production assumptions or anything like that? Are you just straight flat production from 1Q?
Well, this
is a time where capital is changing, costs are changing, production outlooks are changing as capital is being re traced. So we've been giving pretty current guidance as we move along. You can think of the synergies as relative to 2019, which is more of a stable year because there's been a lot of change happening. We showed our stress test at 30. We did our Investor Day at 60.
I mean, there's no signaling in the price. We're just showing the financial metrics at a with a reasonable current market price based on strip pricing and just rounding it to 40.
Okay, got it. Thank you.
Thanks, Jason.
Thank
you. Our
next question comes from Paul Cheng from Scotiabank. Your line is open.
Hey, guys. Good morning. Couple of questions that I think for my Noble actually has done a good job in developing their asset and actually quite well defined. So when you're looking at their asset today, do you see anything where that you're going to do differently? So that's the first question.
The second question maybe is for Pierre. The $300,000,000 on the synergy PE tax, is that include any of the interest expense, if not? Is there opportunity of the refinancing and that will add to? And out of that $300,000,000 how much is actually on the G and A side?
Okay. So I'll start with our thinking on the benefits of combining the 2 companies, Paul.
We've got
a lot of deepwater experience, a lot of gas experience. And so I think we're well positioned to support the ongoing efforts in the Eastern Med. Additional development activity over time there is something that certainly we've got strong capability. And when you look at the Permian, the Noble Energy position is good. It's concentrated here in Reeves County, but it's relatively smaller to the position that we have there.
And so I think the scale that we will be able to bring will bring capital efficiencies and development efficiencies that are likely to be helpful. That said, we do a lot of benchmarking down there across all the different regions in the basin and Noble has strong performance in the Permian today. And so I think bringing together the teams that are driving performance for both companies allows us to share best practices, learn from one another and look for efficiencies, particularly those of scale that can help us improve even further. In the DJ, Noble's development is strong. The performance is excellent.
As you say, they've done a really nice job. We have engaged in factory drilling type operations for decades around the world, in Indonesia, in the San Joaquin Valley, in Thailand. And so running a scaled factory drilling model that is kind of in our DNA. And I think again marrying up that capability with the unique basin knowledge that Noble Energy has is a powerful combination. So we'll look to bring the best of both together in each of those areas and build on what has already been strong performance as you say.
So great respect for that and I think our folks will do everything we can to
Lobo has a pretty well defined plan how that they want to ramp up the gas wallet over there. After Chevron takeover, is there any change in that pace or that you think that's a reasonable pace and maybe achievable pace?
Yes. At this point, Paul, I'll simply say we've got a lot of respect for what Noble has been doing. And I think your best assumption is that the plan they've laid out is the plan that we would continue to execute. I'm not going to speculate on anything other than that today.
Okay. Thank you.
Hey, Paul, it's Pierre. So the chart on synergy shows about 2 thirds we've labeled operating costs, 1 third other. In the other you have as Mike talked about exploration synergies. There's a very modest amount of interest cost savings, but it's really just the bank debt, the revolver, which we can immediately pay down and fold into our business. The bonds have make whole calls, which are very standard, which make them uneconomic for stronger credit to pay them off early.
Noble has done a nice job of managing the maturity, so they'll come due over time. So that will be ultimately a synergy. It'll get refinanced at a lower cost, but that's not within 12 months, right? That's as those bonds mature. And again, if you go to the operating costs, you can think of that as largely G and A.
I think Mike gave examples of that. That's there's corporate costs, there's regional headquarter type office costs and that's people, but it's consultants, it's IT, it's office. It does include some insurance that we can save because we tend to have a higher level of self insurance. So there's no as Mike said, there are no field cost reductions. I mean nothing in the actual lifting producing and lifting of oil and natural gas.
That's something as we you can only identify so much in due diligence, you're focused at kind of a high level as we get in and operate the assets. As Mike said, that's when you see the opportunities to leverage maybe a contract where we can procure services cheaper and find other efficiencies that are inherent in the field operations.
So over time, synergies should be better, right? Because that's simple as the low hanging provide interest expense and also the combined in the Permian, all those is not really included.
Yes. Again, Paul, the $300,000,000 is based on what we can see on due diligence, which is you don't get to see everything and you're not operating as a combined company yet. So yes, we're certainly hopeful that as we operate together, we will find more than the $300,000,000 we currently have.
Thank you. Thank you. Our next question comes from Roger Read from Wells Fargo. Your line is open.
Reed, Red, whatever. I'll take it this morning. How are you all?
Good, Roger.
Congratulations to you. Glad to see, I guess, about a year later, but still moving forward. Couple of questions I had. Just to think about strategically why you're doing it and what you really get out of it. And one of the ways that I was going to come at it is you get the $300,000,000 of synergies, presumably all cash.
You've got the dividend is going to go up roughly $250,000,000 on kind of a net basis. So if I'm looking in year 1, cash isn't all that big, obviously, as a driver here in the first part of the merger period. So I was curious as you really think about it, Mike, what beyond sort of just the obvious bullet points on the presentation really kind of drives us from both a cash standpoint, I'd
say, the kind
of $40 Brent and then also from the true strategic side here?
Well, Roger, there's operating cash flow that's generated before the synergies. And Noble is in a strong position on operating cash flow. They've done a good job on bringing capital spending down nearly 50% is the commitment for this year. So there's good strong free cash flow accretion here. And then the synergies, as you say, kind of at a high level, you could argue more than cover the incremental dividend.
And as Pierre just said, we'll do everything we can to deliver more on the synergy front. More broadly speaking, this is about strengthening the portfolio and you bring these 2 companies together and I've talked about a new large and with some further exploration success, sizable legacy position that's potential in the Eastern Med, further high grading and strengthening the position in the Permian. And then look, we really like unconventionals. And in the DJ Basin is a proven derisked unconventional basin that frankly as I said earlier more mature than our position in either the Vaca Muerta or the Duvernay. And it just gives us another piston in the unconventional engine that is strong as well.
So this is a good portfolio strengthening combination that over the long term as technology evolves and we continue to learn more and more about how to make the unconventionals better, it just strengthens that part of our portfolio. So we're in a resource business. You want to have good resource depth. This is nearly 7,000,000,000 barrels of resource that is added to our inventory at attractive economics and we think good long term value creation.
Okay. Thanks on that. And then the only other question I had was, anything on the asset disposal side here that you would anticipate? I know Pierre just ran through kind of the issues with the balance sheet. Nothing seems particularly pressing there, but I was just curious anything that doesn't really fit with the overall program?
Roger, I'd say our standing guidance applies. We're always looking at the ability for assets in our portfolio to compete for capital in a disciplined capital kind of a mindset. And when we see things that we think are going to perhaps be challenged to compete for capital that may fit better for others, we're certainly willing to consider those. We're not in a position where we have to do anything. And so we've already done a lot of high grading as you've seen over the last few years, but we'll continue to have a high bar for capital in our portfolio.
And when we see things that we think are going to work better for somebody else, we're certainly willing to consider that. It's not a great market right now to be selling assets into. And so I don't think you'll see us rushing out to do anything until we feel like we've got a decent market for the prospective transactions.
Okay, great. Thank you and congrats again.
All right. Thank you, Roger. Thanks, Roger.
Thank you. Our next question comes from Jason Gabelman from Cowen. Your line is open.
Hey, good morning and congrats on the deal. I just firstly want to, I guess, go back to the Israeli gas projects. So, the offtake ability in this lower price environment while Egypt is oversupplied? And if you're not selling gas into Egypt, do you kind of just accept what the market is pricing out for gas right now? And the point of the question, just trying to understand the downside risk in the near term as both the market and the global gas market remain oversupplied?
And I have a follow-up. Thanks.
Yes, Roger. I or Jason, I'm sorry, Roger was last. Jason, we've reviewed the contracts as part of diligence. They've got relatively high take or pay percentages. The world gas markets are well supplied right now as our oil markets.
And so we've been, I think, realistic in how we've assessed the near term prospects for commercialization of gas through production growth and the realities of the existing contracts as per the earlier question from Phil. So this is a long term business, it's long term set of assets and we take a long term view on markets and a long term view on value creation. And so these things can go through cycles and broadly speaking, the underlying demand for gas is going to grow, populations are going to grow, the standard of living is going to grow and the need for power generation is going to grow. And we'll work through the short term issues on contracts as we do on Gorgon and Wheatstone and other gas assets that we have. But we think the long term fundamentals here are very solid and we think it's a high quality resource that the world is going to need.
Great, thanks. And that's, I guess, a good segue to my second question. Was ESG considerations, important to deal? I mean, looking at the Apache deal, you would have acquired a large LNG project with that deal. This is obviously more or becoming more of a gas weighted company Noble is as the Israeli assets ramp up.
So does this kind of help you? And as you're trying to think about ESG and form your strategy on that front, does this help attack maybe some of the metrics that you're looking at targeting over the near and medium term? Thanks.
Yes. So the very first screening criteria is the quality of the assets and that and the opportunity to create value is where everything begins. But of course, we look at things through multiple lenses and I'll go more broadly. I think that the commitment that Noble Energy has to ESG is very aligned with ours. And I think you look at the trajectory of what they're doing in a number of things, significant reductions in flaring in the Permian here in recent times and they're committed to the kinds of things we are.
This does bring some more gas into our business. But I won't tell you that we're driving at a particular type of asset in order to satisfy an ESG objective. We're looking for quality assets that are going to be reliable, low cost supply into strong markets. And then we're looking through an ESG lens to be sure that it's consistent with our commitments on greenhouse gas intensity reduction and other dimensions of ESG, which I think are well aligned. But it's a we've got to improve returns in our business and we've got to reduce greenhouse gas emissions intensity both and we've got to do it in a disciplined manner.
And these assets will allow us to achieve both of those objectives.
Understood. Thanks.
Thanks, Jason. Thanks, Jason.
Thank you. And we'll take our last question from Sam Margolin from Wolfe
Research. So at the time of the Anadarko process, you fielded a lot of questions about the Colorado regulatory environment. At the time, you said that obviously you're comfortable with it. You had a history there. You're in good standing.
I doubt that's changed since we're here. But maybe just some thoughts about that because it's certainly going to be something that's probed by the investment community.
Sure. So look, this is a risk that I think Dave and his team have been managing very well. Noble's position is in Weld County. It's further from the populated areas and some of the incorporated cities that have been a little more strident on this issue. If you look at the results of the last ballot initiative in 2018, and you go through it precinct by precinct.
There's strong support for the industry in Weld County and in areas where Noble Energy operates. Noble is a high quality operator that holds themselves to a high standard. And I think it's important for all of us as we develop resources to do it responsibly, do it in a way that demonstrates to the public that it's compatible with the other uses of the land and the other expectations for local communities. And I think Noble Energy has got a strong history of doing that. We intend to maintain that.
We'll also work to have good collaborative relationships with the political and regulatory organizations in Colorado. We already have that today through our Western Colorado operations and that will be further strengthened as we integrate with Noble's team that's working out in the DJ. So it's a risk that needs to be managed, but I think it's one that's been managed well and we will continue to uphold that.
And this is just sort of a related follow-up. But as Phil pointed out, the activity levels on Noble's onshore Lower forty eight assets is pretty low right now. I think what I've gathered from your commentary and guidance is that in 2021, your legacy position in the Permian was so advantaged that it wouldn't necessarily take a heroic effort by commodity markets to have Chevron start restoring the pace of activity that's somewhat close to 2019 level. Just wondering in a pecking order where these new assets fit as you evaluate that process? And I understand it's early, but just kind of a 10,000 foot view would be helpful.
Yes, Sam. It is early. And look, we're in the middle of a year that has been a year none of us expected. We've got an uncertain trajectory right now on the pandemic and what that means for economies and demand. And certainly, oil markets have recovered from the depths that we saw in April.
But there is still a lot of uncertainty out there in the environment on both the demand side and frankly on the supply side. And so as we get closer to the end of the year and we get our business planning process completed and have a better view into how we think 2021 and subsequent years are beginning to set up. We'll come back to you with more specific capital guidance and some indicators on where we see activity levels going forward. But it's just it's premature to speculate on that right now.
All right. Thanks very much and congrats again.
Hey, thank you, Sam. Thanks, Sam.
Well, I'd like to thank everyone for your time today. We appreciate your interest in Chevron and everyone's participation on today's call. Please stay safe and healthy. Crystal, back to you.
Ladies and gentlemen, this concludes Chevron's conference call. You may now disconnect.