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As filed with the Securities and Exchange Commission on August 11, 2020

No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Chevron Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   2911   94-0890210
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

6001 Bollinger Canyon Road,

San Ramon, California 94583-2324

(925) 842-1000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Mary A. Francis

Corporate Secretary and Chief Governance Officer

Chevron Corporation

6001 Bollinger Canyon Road, San Ramon, CA 94583

(925) 842-1000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies of all communications, including communications sent to agent for service, should be sent to:

 

Scott A. Barshay

Steven J. Williams

Kyle T. Seifried

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

(212) 373-3000

 

Rachel G. Clingman

Senior Vice President, General Counsel and Corporate Secretary

Noble Energy, Inc.

1001 Noble Energy Way

Houston, Texas 77070

(281) 872-3100

 

Stephen M. Gill

Douglas E. McWilliams

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002

(713) 758-2222

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the proposed merger described in the enclosed proxy statement/prospectus have been satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

  Amount
to be
Registered(1)
  Proposed
Maximum
Offering Price
Per Unit
 

Proposed
Maximum
Aggregate

Offering Price(2)

  Amount of
Registration Fee(3)

Common stock, par value $0.75 per share

  59,343,421   N/A   $5,087,290,714.16   $660,330.33

 

 

(1)

Represents the estimated maximum number of shares of the registrant’s common stock, par value $0.75 per share (“Chevron common stock”), to be issued, or subject to options or other stock-based awards that may be assumed by the registrant upon completion of the merger described in the proxy statement/prospectus contained herein, and is based on (1) 498,265,496, the estimated maximum number of shares of Noble Energy, Inc. (“Noble Energy”), par value $0.01 per share (“Noble Energy common stock”) to be outstanding immediately prior to the completion of the merger, including restricted shares and shares issuable upon the exercise or settlement of Noble Energy options and stock-based awards outstanding as of August 10, 2020 that are or may become exercisable or issuable upon settlement prior to completion of the merger, multiplied by (2) 0.1191, the exchange ratio under the merger agreement described in the proxy statement/prospectus contained herein.

(2)

Pursuant to Rules 457(c) and 457(f)(1) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is equal to the product of (1) $10.21, the average of the high and low prices of common stock of Noble Energy, Inc., par value $0.01 per share (the “Noble Energy common stock”), as reported on the Nasdaq Global Select Market on August 7, 2020 and (2) 498,265,496, the estimated maximum number of shares of Noble Energy common stock, including restricted shares and shares issuable upon the exercise or settlement of Noble Energy options and stock-based awards outstanding as of August 10, 2020 that are or may become exercisable or issuable upon settlement prior to completion of the merger.

(3)

Computed in accordance with Rules 457(c) and 457(f) under the Securities Act to be $660,330.33, which is equal to 0.0001298 multiplied by the proposed maximum aggregate offering price of $5,087,290,714.16.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. We may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where an offer, solicitation or sale is not permitted.

 

PRELIMINARY, SUBJECT TO COMPLETION, DATED AUGUST 11, 2020

 

 

LOGO

TRANSACTION PROPOSED-YOUR VOTE IS VERY IMPORTANT

Dear Stockholders of Noble Energy, Inc.:

On July 20, 2020, Noble Energy, Inc. (“Noble Energy”), Chevron Corporation (“Chevron”) and Chelsea Merger Sub Inc., a direct, wholly-owned subsidiary of Chevron (“Merger Subsidiary”), entered into a merger agreement under which, upon the terms and subject to the conditions set forth therein, Merger Subsidiary will merge with and into Noble Energy, with Noble Energy surviving as a direct, wholly-owned subsidiary of Chevron (the “merger”). If the merger is completed, Noble Energy stockholders will receive, in exchange for each share of Noble Energy common stock held immediately prior to the merger, 0.1191 of a share of Chevron common stock. The Noble Energy Board of Directors (the “Noble Energy Board”) has unanimously approved the merger agreement and recommends that Noble Energy stockholders vote in favor of adopting the merger agreement.

Based on Chevron’s closing stock price on [                    ], 2020, the most recent practicable date for which such information was available, the merger consideration represented approximately $[            ] in value per share of Noble Energy common stock, which represents a premium of approximately [    ]% over Noble Energy’s closing stock price on July 17, 2020, the last trading day before the public announcement of the execution of the merger agreement with Chevron. The value of the merger consideration to be received in exchange for each share of Noble Energy common stock will fluctuate with the market value of Chevron common stock until the transaction is complete. The common stock of Noble Energy is listed on the Nasdaq Global Select Market under the symbol “NBL”. The common stock of Chevron is listed on the New York Stock Exchange under the symbol “CVX”. Upon completion of the merger, former Noble Energy stockholders are expected to own approximately [    ]% of the then outstanding Chevron common stock, based on Chevron’s outstanding equity as of [                    ], 2020.

The merger cannot be completed without approval of the proposal to adopt the merger agreement by the affirmative vote of holders of a majority of the outstanding shares of Noble Energy common stock entitled to vote thereon. Because of this, Noble Energy is holding a special meeting of its stockholders on [                    ], 2020 to vote on the proposal necessary to complete the merger. Information about the meeting, the merger, the merger agreement, and the other business to be considered by stockholders at the special meeting is contained in this proxy statement/prospectus. The Noble Energy Board has fixed the close of business on [                    ], 2020 as the record date for the determination of Noble Energy stockholders entitled to notice of, and to vote at, the special meeting. Any stockholder entitled to attend and vote at the special meeting is entitled to appoint a proxy to attend and vote on such stockholder’s behalf. Such proxy need not be a holder of Noble Energy common stock. We urge you to read this proxy statement/prospectus and the annexes and documents incorporated by reference carefully. You should also carefully consider the risks that are described in the “Risk Factors” section beginning on page [    ].

The Noble Energy Board has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of the Noble Energy stockholders, approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and directed that the merger agreement be submitted to the Noble Energy stockholders for adoption at a meeting of such stockholders, and unanimously recommends that Noble Energy stockholders vote “FOR” the proposal to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger.

Your vote is very important regardless of the number of shares of Noble Energy common stock that you own.

Whether or not you plan to attend the special meeting, please submit your proxy as soon as possible by following the instructions on the accompanying proxy card to make sure that your shares are represented at the meeting. If your shares are held in the name of a broker, bank or other nominee, please follow the instructions on the voting instruction form furnished by the broker, bank or other nominee. You must provide voting instructions by filling out the voting instruction form in order for your shares to be voted.

In light of public health concerns regarding the coronavirus (COVID-19) outbreak and in consideration of medical and governmental recommendations and orders limiting the number of persons that may gather at public events, the special meeting will be held in a virtual meeting format only. You will not be able to attend the special meeting physically in person.

Thank you for your continued support, interest and investment in Noble Energy.

Very truly yours,

David L. Stover

Chairman of the Board and

Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger or the other transactions described in this proxy statement/prospectus or the securities to be issued in connection with the merger or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated [                    ], 2020, and is first being mailed to stockholders of Noble Energy on or about [                    ], 2020.


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LOGO

1001 Noble Energy Way

Houston, Texas 77070

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To be held on [                    ], 2020

To the Stockholders of Noble Energy, Inc.:

We are pleased to invite you to attend the special meeting of stockholders of Noble Energy, Inc., a Delaware corporation (“Noble Energy”), which will be held at [            ], Central Time, on [                    ], 2020, virtually at www.virtualshareholdermeeting.com/NBL2020SM, for the following purposes:

 

   

to vote on a proposal to adopt the Agreement and Plan of Merger, dated as of July 20, 2020, by and among Chevron Corporation, a Delaware corporation (“Chevron”), Chelsea Merger Sub Inc., a direct, wholly-owned subsidiary of Chevron (“Merger Subsidiary”), and Noble Energy (as it may be amended from time to time, the “merger agreement”), which is further described in the sections titled “The Merger” and “The Merger Agreement”, beginning on pages [    ] and [    ], respectively, and a copy of which is attached as Annex A to the proxy statement/prospectus of which this notice is a part (the “merger proposal”);

 

   

to vote on an advisory (non-binding) proposal to approve the compensation that may be paid or become payable to Noble Energy’s named executive officers that is based on or otherwise related to the merger (the “merger-related compensation proposal”); and

 

   

to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement (the “adjournment proposal”).

Noble Energy will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement thereof by or at the direction of the Noble Energy Board of Directors (the “Noble Energy Board”). Please refer to the proxy statement/prospectus of which this notice is a part for further information with respect to the business to be transacted at the special meeting.

In light of public health concerns regarding the coronavirus (COVID-19) outbreak and in consideration of medical and governmental recommendations and orders limiting the number of persons that may gather at public events, the special meeting will be held in a virtual meeting format only. You will not be able to attend the special meeting physically in person.

The Noble Energy Board has fixed the close of business on [                    ], 2020 as the record date for the special meeting. Only Noble Energy stockholders of record at the record date are entitled to receive notice of, and to vote at, the special meeting or any adjournment or postponement thereof. A complete list of stockholders entitled to vote at the special meeting will be available for a period of at least ten days prior to the special meeting. If you would like to inspect the list of Noble Energy stockholders of record, please call the Investor Relations department at (281) 872-3100 to schedule an appointment or request access. A certified list of eligible Noble Energy stockholders will be available for inspection during the special meeting at www.virtualshareholdermeeting.com/NBL2020SM by entering the control number provided on your proxy card, voting instruction form or notice.

Completion of the merger is conditioned on adoption of the merger agreement by the Noble Energy stockholders, which requires the affirmative vote of holders of a majority of the outstanding shares of Noble Energy common stock entitled to vote thereon.

The Noble Energy Board has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of the Noble


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Energy stockholders, approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and directed that the merger agreement be submitted to the Noble Energy stockholders for adoption at a meeting of such stockholders and unanimously recommends that Noble Energy stockholders vote “FOR” the merger proposal, “FOR” the merger-related compensation proposal and “FOR” the adjournment proposal.

Your vote is very important regardless of the number of shares of Noble Energy common stock that you own. If you plan to attend the special meeting virtually, please follow the instructions as outlined in this proxy statement/prospectus. Whether or not you expect to attend the special meeting virtually, we urge you to submit your vote in advance of the meeting. If your shares are held in the name of a broker, bank or other nominee, please vote by following the instructions on the voting instruction form furnished by the broker, bank or other nominee. If you hold your shares in your own name, submit a proxy to vote your shares as promptly as possible by (i) visiting the internet site listed on the accompanying proxy card, (ii) calling the toll-free number listed on the proxy card or (iii) submitting your proxy card by mail by using the self-addressed, stamped envelope provided. Submitting a proxy will not prevent you from voting virtually at the meeting, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of Noble Energy common stock may vote virtually at the special meeting, thereby revoking any previous proxy. In addition, a proxy may also be revoked in writing before the special meeting in the manner described in the proxy statement/prospectus of which this notice is a part.

The proxy statement/prospectus of which this notice is a part provides a detailed description of the merger and the merger agreement and the other matters to be considered at the special meeting. We urge you to carefully read this proxy statement/prospectus, including any documents incorporated by reference herein, and the annexes in their entirety. In particular, we urge you to carefully read the section entitled “Risk Factors” beginning on page [    ].

If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies or need help voting your shares of Noble Energy common stock, please contact Noble Energy’s proxy solicitor:

 

 

LOGO

1407 Broadway, 27th Floor

New York, New York 10018

Email: NBL@mackenziepartners.com

Call Collect: (212) 929-5500

Toll-Free: (800) 322-2885

By Order of the Noble Energy Board of Directors,

Rachel G. Clingman

Senior Vice President, General Counsel and

Corporate Secretary

[                    ], 2020

Houston, Texas


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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates by reference important business and financial information about Chevron and Noble Energy from other documents that are not included in or delivered with this proxy statement/prospectus. For a listing of the documents incorporated by reference into this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page [    ].

You can obtain any of the documents incorporated by reference into this proxy statement/prospectus without charge by requesting them in writing or by telephone as follows:

For information related to Noble Energy:

Noble Energy, Inc.

1001 Noble Energy Way

Houston, TX 77070

Attention: Investor Relations

Telephone: (281) 872-3100

For information related to Chevron:

Chevron Corporation

6001 Bollinger Canyon Rd., Building A

San Ramon, California 94583

Attention: Investor Relations

Telephone: (925) 842-5690

To receive timely delivery of the documents in advance of the special meeting of Noble Energy stockholders, you should make your request no later than [                    ], 2020, which is five business days before the meeting.

You may also obtain any of the documents incorporated by reference into this proxy statement/prospectus without charge through the Securities and Exchange Commission (the “SEC”) website at www.sec.gov. In addition, you may obtain copies of documents filed by Chevron with the SEC by accessing Chevron’s website at www.chevron.com under the tab “Investors” and then under the heading “SEC Filings.” You may also obtain copies of documents filed by Noble Energy with the SEC by accessing Noble Energy’s website at www.nblenergy.com under the tab “Investors” and then under the heading “Financial Information.”

We are not incorporating the contents of the websites of the SEC, Chevron, Noble Energy or any other entity into this proxy statement/prospectus. We are providing the information about how you can obtain certain documents that are incorporated by reference into this proxy statement/prospectus at these websites only for your convenience.

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by Chevron (File No. 333-[            ]), constitutes a prospectus of Chevron under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of common stock, par value $0.75 per share, of Chevron (“Chevron common stock”) to be issued to Noble Energy stockholders pursuant to the merger agreement. This document also constitutes a proxy statement of Noble Energy under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It also constitutes a notice of meeting with respect to the special meeting, at which Noble Energy stockholders will be asked to consider and vote on the adoption of the merger agreement and other related proposals.

Chevron has supplied all information contained in, and incorporated by reference into, this proxy statement/prospectus relating to Chevron and Merger Subsidiary, and Noble Energy has supplied all such information relating to Noble Energy.

You should rely only on the information contained in, and incorporated by reference into, this proxy statement/prospectus. Chevron and Noble Energy have not authorized anyone to provide you with information other than the information that is contained in, or incorporated by reference into, this proxy statement/prospectus. Chevron and Noble Energy take no responsibility for, and can provide no assurances as to the reliability of, any other information that others may give you. This proxy statement/prospectus is dated [                    ], 2020, and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date. Further, you should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to Noble Energy stockholders nor the issuance by Chevron of shares of Chevron common stock pursuant to the merger agreement will create any implication to the contrary.

 

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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

     1  

SUMMARY

     11  

Information about the Companies

     11  

The Merger

     12  

Merger Consideration

     12  

Treatment of Noble Energy Stock Options and Other Stock-Based Awards

     13  

Recommendations of the Noble Energy Board

     14  

Opinion of Noble Energy’s Financial Advisor

     14  

Interests of Directors and Executive Officers of Noble Energy in the Merger

     15  

Material U.S. Federal Income Tax Consequences of the Merger

     15  

Accounting Treatment of the Merger

     15  

No Appraisal Rights

     16  

Regulatory Approvals Required for the Merger

     16  

Conditions to Completion of the Merger

     16  

Treatment of Existing Debt

     16  

No Solicitation

     17  

Termination of the Merger Agreement; Termination Fees

     17  

Special Meeting

     20  

Risk Factors

     22  

SELECTED HISTORICAL FINANCIAL DATA

     23  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA COMBINED PER SHARE INFORMATION

     26  

Market Prices

     28  

Dividends

     28  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     30  

RISK FACTORS

     33  

Risks Related to the Merger

     33  

Risks Relating to Chevron After Completion of the Merger

     39  

Other Risk Factors of Chevron and Noble Energy

     41  

THE MERGER

     42  

Background of the Merger

     42  

Chevron’s Rationale for the Transaction

     57  

Noble Energy Board’s Recommendations and Its Reasons for the Transaction

     57  

Opinion of Noble Energy’s Financial Advisor

     64  

Noble Energy Unaudited Prospective Financial Information

     71  

Interests of Directors and Executive Officers of Noble Energy in the Merger

     76  

Share Ownership of Directors, Executive Officers and Certain Beneficial Owners of Noble Energy

     88  

Director and Officer Indemnification

     90  

Accounting Treatment of the Merger

     90  

Regulatory Approvals Required for the Merger

     90  

Treatment of Existing Debt

     91  

Treatment of Noble Energy Stock Options and Other Stock-Based Awards

     91  

No Appraisal Rights

     92  

NYSE Listing of Chevron Common Stock; Delisting and Deregistration of Noble Energy Common Stock

     92  

Material U.S. Federal Income Tax Consequences

     93  

Restrictions on Sales of Shares of Chevron Common Stock Received in the Merger

     96  

Certain Contracts between Chevron and Noble Energy

     96  

THE MERGER AGREEMENT

     97  

Explanatory Note Regarding the Merger Agreement

     97  

 

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Structure of the Merger

     97  

Timing of Closing

     97  

Merger Consideration

     98  

Covenants and Agreements

     101  

Representations and Warranties

     113  

Conditions to Completion of the Merger

     116  

Termination of the Merger Agreement

     116  

Expenses

     118  

Amendments; Waivers

     119  

Governing Law; Jurisdiction; Waiver of Jury Trial

     119  

Specific Performance

     119  

Third-Party Beneficiaries

     119  

INFORMATION ABOUT THE COMPANIES

     120  

SPECIAL MEETING

     122  

Date, Time and Place

     122  

Purpose of the Special Meeting

     122  

Recommendation of the Noble Energy Board

     122  

Record Date; Stockholders Entitled to Vote

     123  

Voting by Noble Energy’s Directors and Executive Officers

     123  

Quorum; Adjournment

     123  

Required Vote; Broker Non-Votes and Abstentions

     124  

Voting of Proxies by Holders of Record

     124  

Attendance at the Special Meeting and Voting Virtually

     125  

Revocability of Proxies

     125  

Solicitation

     126  

Assistance

     126  

Tabulation of Votes

     126  

NOBLE ENERGY PROPOSALS

     127  

NON-BINDING, ADVISORY VOTE ON MERGER-RELATED COMPENSATION FOR NOBLE ENERGY’S NAMED EXECUTIVE OFFICERS

     129  

DESCRIPTION OF CHEVRON COMMON STOCK

     130  

COMPARISON OF RIGHTS OF STOCKHOLDERS OF CHEVRON AND NOBLE ENERGY

     131  

VALIDITY OF COMMON STOCK

     142  

EXPERTS

     142  

STOCKHOLDER PROPOSALS AND NOMINATIONS FOR NOBLE ENERGY’S 2021 ANNUAL MEETING OF STOCKHOLDERS

     142  

HOUSEHOLDING OF PROXY STATEMENT/PROSPECTUS

     143  

WHERE YOU CAN FIND MORE INFORMATION

     144  

Chevron SEC Filings

     144  

Noble Energy SEC Filings

     144  

Annex A: Agreement and Plan of Merger

     A-1  

Annex B: Opinion of J.P. Morgan Securities LLC

     B-1  

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following questions and answers briefly address some commonly asked questions about the merger and the special meeting of Noble Energy stockholders (the “special meeting”). They may not include all of the information that is important to stockholders of Noble Energy. Noble Energy stockholders should carefully read this entire proxy statement/prospectus, including the annexes and the other documents referred to or incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page [    ] of this proxy statement/prospectus.

Q: What is the merger?

Chevron Corporation (“Chevron”), Chelsea Merger Sub Inc., a direct, wholly-owned subsidiary of Chevron (“Merger Subsidiary”), and Noble Energy, Inc. (“Noble Energy”) have entered into an Agreement and Plan of Merger, dated as of July 20, 2020 (as it may be amended from time to time, the “merger agreement”). A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus. The merger agreement contains the terms and conditions of the proposed acquisition of Noble Energy by Chevron. Under the merger agreement, subject to satisfaction (or, to the extent permitted by law and in accordance with the merger agreement, waiver) of the conditions to the merger set forth in the merger agreement and described in this proxy statement/prospectus, Merger Subsidiary will merge with and into Noble Energy, with Noble Energy continuing as the surviving corporation and a direct, wholly-owned subsidiary of Chevron (the “merger” or the “transaction”).

As a result of the merger, Noble Energy will become a direct, wholly-owned subsidiary of Chevron and will no longer be a publicly held company. Following the merger, Noble Energy common stock will be delisted from the Nasdaq Global Select Market (“Nasdaq”) and will be deregistered under the Exchange Act, after which Noble Energy will no longer be required under SEC rules and regulations to file periodic reports with the SEC in respect of Noble Energy common stock.

Q: Why am I receiving these materials?

Chevron and Noble Energy are sending these materials to Noble Energy stockholders to help them decide how to vote their shares of Noble Energy common stock with respect to the merger and other matters to be considered at the special meeting.

The merger cannot be completed unless Noble Energy stockholders adopt the merger agreement with the affirmative vote of the holders of a majority of the outstanding shares of Noble Energy common stock entitled to vote thereon. Noble Energy is holding a special meeting of its stockholders to vote on the proposal to adopt the merger agreement and other related proposals. Information about this special meeting, the merger and the other business to be considered by stockholders at the special meeting is contained in this proxy statement/prospectus.

This proxy statement/prospectus constitutes both a proxy statement of Noble Energy and a prospectus of Chevron. It is a proxy statement because the board of directors of Noble Energy (the “Noble Energy Board”) is soliciting proxies from its stockholders. It is a prospectus because Chevron will issue shares of its common stock in exchange for outstanding shares of Noble Energy common stock in the merger.

Q: What will Noble Energy stockholders receive in the merger?

In the merger, Noble Energy stockholders will receive 0.1191 (the “exchange ratio”) of a validly issued, fully paid and non-assessable share of Chevron common stock (the “merger consideration”) for each share of Noble Energy common stock (other than (i) shares of Noble Energy common stock held by Chevron, Noble Energy, Merger Subsidiary or any of their respective direct or indirect wholly-owned subsidiaries (“cancelled shares”) and (ii) certain shares of Noble Energy common stock subject to stock-based awards that will be treated in the manner described under the heading “The Merger—Treatment of Noble Energy Stock Options and Other Stock-

 

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Based Awards”). This exchange ratio is fixed and will not be adjusted to reflect changes in the stock price of either company before the merger is complete. The exchange ratio will, however, be adjusted appropriately to fully reflect the effect of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon, with respect to outstanding shares of capital stock of either Chevron or Noble Energy with a record date between the date of the merger agreement and the completion of the merger. No fractional shares of Chevron common stock will be issued in connection with the merger. Each holder of Noble Energy common stock that otherwise would have been entitled to receive a fractional share of Chevron common stock immediately prior to the effective time of the merger will have the right to receive an amount in cash, without interest, rounded to the nearest cent, in lieu of such fractional share. The value of such cash payment will be calculated by the exchange agent and will represent the holder’s proportionate interest in a trust of proceeds established from the open-market sale of that number of shares of Chevron common stock equal to the excess of (x) the aggregate number of shares of Chevron common stock to be delivered to the exchange agent by Chevron pursuant to the terms of the merger agreement over (y) the aggregate number of whole shares of Chevron common stock to be distributed to the holders of certificates or book-entry shares previously representing any such shares of Noble Energy common stock pursuant to the merger agreement. Chevron stockholders will continue to own their existing shares of Chevron common stock, the form of which will not be changed by the transaction. For more details on the merger consideration, see “The Merger Agreement—Merger Consideration” beginning on page [    ].

Q: What equity stake will Noble Energy stockholders hold in Chevron immediately following the merger?

Upon the completion of the merger, based on the exchange ratio, the estimated number of shares of Chevron common stock issuable as the merger consideration is approximately [            ] million shares, which will result in former Noble Energy stockholders holding approximately [    ]% of the outstanding fully diluted Chevron common stock based on the number of outstanding shares of common stock and outstanding stock-based awards of Chevron and Noble Energy as of [                    ], 2020, the most recent practicable date for which such information was available.

For more details on the merger consideration and the treatment of Noble Energy stock options and stock-based awards, see “The Merger Agreement—Merger Consideration” beginning on page [    ] and “The Merger Agreement—Merger Consideration—Treatment of Noble Energy Stock Options and Other Stock-Based Awards” beginning on page [    ], respectively.

Q: When do Noble Energy and Chevron expect to complete the merger?

Chevron and Noble Energy are working to complete the merger as soon as practicable and currently expect that the transaction will be completed in the fourth quarter of 2020. Neither Chevron nor Noble Energy can predict, however, the actual date on which the transaction will be completed because it is subject to conditions beyond each company’s control. See “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [    ].

Q: Is Chevron’s obligation to complete the merger subject to Chevron receiving financing?

No. Chevron’s obligations under the merger agreement are not subject to any condition regarding its ability to finance, or obtain financing for, the merger.

Q: What happens if the merger is not completed?

If the merger agreement is not adopted by Noble Energy stockholders or if the merger is not completed for any other reason, Noble Energy stockholders will not receive any consideration for their shares of Noble Energy common stock. Instead, Noble Energy will remain an independent public company, Noble Energy common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and Noble Energy will

 

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continue to file periodic reports with the SEC. Under specific circumstances, Noble Energy may be required to pay Chevron a termination fee of $176,295,000. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page [    ].

Q: Will the shares of Chevron common stock I acquire in the merger receive a dividend?

After the closing of the merger, as a holder of Chevron common stock, you will receive the same dividends on shares of Chevron common stock that all other holders of shares of Chevron common stock will receive with any dividend record date that occurs after the closing of the merger.

Q: Will I continue to receive dividends in respect of my shares of Noble Energy common stock?

Prior to the closing of the merger, Noble Energy and Chevron will coordinate regarding the declaration and payment of dividends in respect of their common stock and the record dates and payment dates relating thereto, so as to ensure that you do not receive two dividends, or fail to receive one dividend, in any quarter with respect to your shares of Noble Energy common stock and the Chevron common stock that you receive in exchange therefor in the merger.

After the closing of the merger, former Noble Energy stockholders who hold Noble Energy share certificates will not be entitled to be paid dividends otherwise payable on the shares of Chevron common stock into which their shares of Noble Energy common stock are exchangeable until they surrender their Noble Energy share certificates according to the instructions provided to them. Dividends will be accrued for these stockholders and they will receive the accrued dividends when they surrender their Noble Energy share certificates.

After the closing of the merger, all Chevron dividends will remain subject to approval by Chevron’s board of directors (the “Chevron Board”).

Q: What am I being asked to vote on, and why is this approval necessary?

Noble Energy stockholders are being asked to vote on the following proposals:

 

  1.

a proposal to adopt the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, which is further described in the sections titled “The Merger” and “The Merger Agreement”, beginning on pages [    ] and [    ], respectively (the “merger proposal”);

 

  2.

an advisory (non-binding) proposal to approve the compensation that may be paid or become payable to Noble Energy’s named executive officers that is based on or otherwise related to the merger (the “merger-related compensation proposal”); and

 

  3.

a proposal to approve the adjournment of the Noble Energy special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement (the “adjournment proposal”).

Approval of the merger proposal by the affirmative vote of holders of a majority of the outstanding shares of Noble Energy common stock entitled to vote thereon is required for completion of the merger. The completion of the merger is not conditioned on the approval of the merger-related compensation proposal or the adjournment proposal.

Q: What vote is required to approve each proposal at the special meeting?

The merger proposal: The affirmative vote of holders of a majority of the outstanding shares of Noble Energy common stock entitled to vote thereon is required to approve the merger proposal (the “Noble Energy stockholder approval”).

 

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The merger-related compensation proposal: The affirmative vote of holders of a majority of the outstanding shares of Noble Energy common stock present in person or represented by proxy at the special meeting and entitled to vote thereon is required to approve the advisory (non-binding) merger-related compensation proposal. Because the vote on the merger-related compensation proposal is advisory only, it will not be binding on either Noble Energy or Chevron. Accordingly, if the merger agreement is adopted and the merger is completed, the merger-related compensation will be payable to Noble Energy’s named executive officers, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of Noble Energy’s stockholders.

The adjournment proposal: The affirmative vote of the holders of a majority of the outstanding shares of Noble Energy common stock, present in person or represented by proxy at the special meeting and entitled to vote thereon is required to approve the adjournment proposal. If Noble Energy stockholders approve the adjournment proposal, subject to the terms of the merger agreement, Noble Energy could adjourn the special meeting and use the additional time to solicit additional proxies, including soliciting proxies from Noble Energy stockholders who have previously voted. Noble Energy does not intend to call a vote on the adjournment proposal if the merger proposal is approved at the special meeting.

Virtual attendance at the special meeting constitutes presence in person for purposes of the vote required under Noble Energy’s By-Laws, as amended (“Noble Energy’s By-Laws”).

Q: What happens if the non-binding, advisory merger-related compensation proposal is not approved?

Because the vote on the merger-related compensation proposal is advisory only, it will not be binding on either Noble Energy or Chevron. Accordingly, if the merger agreement is adopted and the merger is completed, the merger-related compensation will be payable to Noble Energy’s named executive officers, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of Noble Energy’s stockholders.

Q: What constitutes a quorum?

The presence at the special meeting, in person or by proxy, of the holders of a majority of the outstanding shares of Noble Energy common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business at the special meeting. Virtual attendance at the special meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the special meeting. Abstentions will count as votes present and entitled to vote for the purpose of determining the presence of a quorum for the transaction of business at the special meeting. Brokers, banks or other nominees that hold shares for beneficial owners do not have discretionary authority to vote the shares as to any matter at the meeting without receiving voting instructions from the beneficial owners. Such shares will be considered to be broker non-votes and will not be counted as present for quorum purposes.

A quorum is necessary to transact business at the special meeting. Noble Energy’s By-Laws provide that if a quorum fails to attend any meeting, the stockholders who are present in person or by proxy and entitled to vote at the special meeting may adjourn the meeting from time to time, without notice other than by announcement at the meeting, to another date, place, if any, and time until a quorum is present. If the adjournment is for more than 30 days or if after the adjournment, a new record date is fixed for the adjourned meeting, Noble Energy will provide a notice of the adjourned meeting to each stockholder of record entitled to vote at the meeting.

Q: How does the Noble Energy Board recommend that I vote?

The Noble Energy Board unanimously recommends that Noble Energy stockholders vote “FOR” the merger proposal, “FOR” the merger-related compensation proposal and “FOR” the adjournment proposal.

 

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Q: What do I need to do now?

After carefully reading and considering the information contained in and incorporated by reference into, this proxy statement/prospectus, please vote your shares as soon as possible so that your shares will be represented at the special meeting. Please follow the instructions set forth on the accompanying proxy card or on the voting instruction form provided by the record holder if your shares are held in the name of your broker, bank or other nominee.

Please do not submit your Noble Energy stock certificates at this time. If the merger is completed, you will receive instructions for surrendering your Noble Energy stock certificates in exchange for shares of Chevron common stock from the exchange agent.

Please carefully consider the information contained in, and incorporated by reference into, this proxy statement/prospectus. Whether or not you plan to attend the special meeting, Noble Energy encourages you to submit your proxy to vote via the internet, by telephone or by mail so that your shares will be voted in accordance with your wishes even if you later decide not to attend the special meeting.

Q: How can I attend the special meeting?

Stockholders as of the close of business on [                    ], 2020 (the “record date”) may attend, vote and submit questions virtually at the special meeting by logging in at www.virtualshareholdermeeting.com/NBL2020SM. To log in, stockholders (or their authorized representatives) will need the control number provided on their proxy card or voting instruction form. If you are not a stockholder or do not have a control number, you may still access the meeting as a guest, but you will not be able to participate.

Q: How do I vote?

If you are a stockholder of record of Noble Energy as of the close of business on the record date, you may submit your proxy before the special meeting in one of the following ways:

 

   

Telephone-use the toll-free number shown on your proxy card;

 

   

Internet-visit the website shown on your proxy card to vote via the internet; or

 

   

Mail-complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

If you are a stockholder of record, you may also cast your vote virtually at the special meeting by following the instructions at www.virtualshareholdermeeting.com/NBL2020SM. If you decide to attend the special meeting virtually and vote at the meeting, your vote will revoke any proxy previously submitted.

If your shares are held in “street name” through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. If your shares are held in “street name” and you intend to vote at the special meeting, you may cast your vote virtually at the special meeting by following the instructions at www.virtualshareholdermeeting.com/NBL2020SM. Your vote at the special meeting will revoke any proxy previously submitted on your behalf by your broker, bank or other nominee.

The meeting will begin promptly at [            ], Central Time, on [                    ], 2020. Noble Energy encourages its stockholders to access the meeting prior to the start time leaving ample time for check-in. Please follow the instructions as outlined in this proxy statement/prospectus.

Even if you plan to attend the special meeting, Noble Energy recommends that you vote your shares in advance as described below so that your vote will be counted even if you later decide not to or become unable to attend the special meeting.

 

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Q: When and where is the special meeting of stockholders? What must I bring to attend the special meeting?

The special meeting of Noble Energy stockholders will be held virtually at www.virtualshareholdermeeting.com/NBL2020SM at [            ], Central Time, on [                    ], 2020. Online access will begin at [            ], Central Time, and Noble Energy encourages its stockholders to access the meeting prior to the start time.

Noble Energy has chosen to hold the special meeting solely via the Internet and not in a physical location given the public health impact of coronavirus (COVID-19) and the desire to promote the health and safety of their respective stockholders, directors, officers, employees and other constituents.

Even if you plan to attend the special meeting, Noble Energy recommends that you vote your shares in advance as described above so that your vote will be counted if you later decide not to or become unable to attend the special meeting.

Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?

If your shares of Noble Energy common stock are registered directly in your name with the transfer agent of Noble Energy, Computershare Trust Company N.A., you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to vote or to grant a proxy for your vote directly to Noble Energy or to a third party to vote at the special meeting.

If your shares are held by a broker, bank or other nominee, you are considered the beneficial owner of shares held in “street name”, and your broker, bank or other nominee is considered the stockholder of record with respect to those shares. Your broker, bank or other nominee will send you, as the beneficial owner, voting instruction forms for you to use in directing the broker, bank or other nominee in how to vote your shares. You should follow the instructions provided by them to vote your shares. You are invited to attend the special meeting and you may cast your vote virtually at the special meeting by following the instructions at www.virtualshareholdermeeting.com/NBL2020SM.

Q: If my shares are held in “street name” by a broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?

If your shares are held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in street name by returning a proxy card or voting instruction form directly to Noble Energy. Your broker, bank or other nominee is obligated to provide you with a voting instruction form for you to use. You may also cast your vote virtually at the special meeting by following the instructions at www.virtualshareholdermeeting.com/NBL2020SM.

Nasdaq permits brokers to vote their customers’ stock held in street name on routine matters when the brokers have not received voting instructions from their customers. Nasdaq does not, however, allow brokers to vote their customers’ stock held in street name on non-routine matters unless they have received voting instructions from their customers. In such cases, the uninstructed shares for which the broker is unable to vote are called broker non-votes. The merger proposal, the merger-related compensation proposal and the adjournment proposal are non-routine matters on which brokers are not allowed to vote unless they have received voting instructions from their customers.

If you are a Noble Energy stockholder and you do not instruct your broker, bank or other nominee on how to vote your shares:

 

   

your broker, bank or other nominee may not vote your shares on the merger proposal, which broker non-votes will have the same effect votes cast “AGAINST” this proposal;

 

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your broker, bank or other nominee may not vote your shares on the merger-related compensation proposal, which broker non-votes will have no effect on the vote for this proposal (assuming a quorum is present); and

 

   

your broker, bank or other nominee may not vote your shares on the adjournment proposal, which broker non-votes will have no effect on the vote for this proposal (assuming a quorum is present).

Q: What if I fail to vote or abstain?

For purposes of the special meeting, an abstention occurs when a stockholder attends the special meeting virtually and does not vote or returns a proxy with an “abstain” instruction.

Merger proposal: An abstention or failure to vote will have the same effect as a vote cast “AGAINST” the merger proposal.

Merger-related compensation proposal: An abstention will have the same effect as a vote cast “AGAINST” the merger-related compensation proposal. If a Noble Energy stockholder is not present virtually at the special meeting and does not respond by proxy, it will have no effect on the vote for the merger-related compensation proposal (assuming a quorum is present).

Adjournment proposal: An abstention will have the same effect as a vote cast “AGAINST” the adjournment proposal. If a Noble Energy stockholder is not present virtually at the special meeting and does not respond by proxy, it will have no effect on the vote for the adjournment proposal (assuming a quorum is present).

Q: What will happen if I return my proxy card or voting instruction form without indicating how to vote?

If you sign and return your proxy card or voting instruction form without indicating how to vote on any particular proposal, the Noble Energy common stock represented by your proxy will be voted as recommended by the Noble Energy Board with respect to that proposal.

If you hold shares of Noble Energy common stock in any Noble Energy benefit plan and do not vote your shares or specify your voting instructions on your proxy card, the administrators of the benefit plan will not vote your benefit plan shares.

Q: May I change or revoke my vote after I have delivered my proxy card or voting instruction form?

Yes. If you are a record holder, you may change or revoke your vote before your proxy is voted at the special meeting as described herein. You may do this in one of four ways:

 

  (1)

submitting a proxy at a later time by internet or telephone until 11:59 p.m. Eastern Time on [                    ], 2020;

 

  (2)

signing and returning a new proxy card with a later date;

 

  (3)

voting virtually at the special meeting; or

 

  (4)

delivering, before 6:00 p.m. Eastern Time on [                    ], 2020, to Noble Energy’s Corporate Secretary at Noble Energy’s executive offices at 1001 Noble Energy Way, Houston, Texas 77070, written revocation of your most recent proxy.

If you are a street name stockholder (for example, if your shares are held in the name of a broker, bank or other holder of record) and you vote by proxy, you may later revoke your proxy by informing the holder of record in accordance with that entity’s procedures.

Q: What are the material U.S. federal income tax consequences of the merger?

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and Chevron and Noble Energy intend to report the merger

 

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consistent with such qualification. In such case, a U.S. holder (as defined in “The Merger—Material U.S. Federal Income Tax Consequences”) of Noble Energy common stock generally would not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of Noble Energy common stock for Chevron common stock (except for any gain (but not loss) recognized with respect to any cash received in lieu of a fractional share of Chevron common stock). Such treatment depends, in part, upon the conclusion that Noble Energy’s outstanding debentures maturing in 2097 (the “Debentures”) constitute indebtedness, and not equity, for U.S. federal income tax purposes. Noble Energy believes that under current law the Debentures constitute indebtedness for U.S. federal income tax purposes, has consistently reported the Debentures as indebtedness for U.S. federal income tax purposes on its U.S. federal income tax returns and has otherwise treated the Debentures consistently with such characterization. The matter is not, however, free from doubt, and there is no controlling authority on the question. If the Internal Revenue Service (the “IRS”) were successfully to assert that the Debentures constitute equity rather than indebtedness for U.S. federal income tax purposes, the merger would generally be treated as a taxable transaction in which U.S. holders of Noble Energy common stock would recognize gain or loss for U.S. federal income tax purposes. Noble Energy and Chevron have not sought, and will not seek, any ruling from the IRS regarding any matters related to the transactions, and as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth herein. You are strongly urged to consult with a tax advisor to determine the particular U.S. federal, state or local or non-U.S. income or other tax consequences of the merger to you. See “The Merger—Material U.S. Federal Income Tax Consequences” beginning on page [    ] for additional information. As provided in the merger agreement, none of Chevron, Noble Energy or any subsidiary of either will have any liability to any Noble Energy stockholder should the merger fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes.

Q: Am I entitled to exercise appraisal rights in connection with the merger instead of receiving the merger consideration for my shares of Noble Energy common stock?

Noble Energy stockholders are not entitled to appraisal rights in connection with the merger. For additional information, see “The Merger—No Appraisal Rights” beginning on page [    ].

Q: What will happen to Noble Energy stock options and other stock-based awards?

Upon completion of the merger:

 

   

Each outstanding option to purchase shares of Noble Energy common stock (a “Noble Energy stock option”) will be converted into an option to acquire, on the same terms and conditions as were applicable under such Noble Energy stock option immediately prior to the completion of the merger (including any provisions for acceleration), the number (rounded down to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy stock option immediately prior to the completion of the merger by (ii) the merger consideration.

The exercise price per share of Chevron common stock subject to any such converted Noble Energy stock option at and after completion of the merger will be an amount (rounded up to the nearest one hundredth of a cent) equal to (i) the exercise price per share of Noble Energy common stock subject to such Noble Energy stock option immediately prior to the completion of the merger divided by (ii) the merger consideration.

 

   

Each outstanding award of cash-settled restricted stock units that corresponds to shares of Noble Energy common stock (a “Noble Energy RSU award”), will be converted into a restricted stock unit award (a “Chevron RSU award”), on the same terms and conditions as were applicable under such Noble Energy RSU award immediately prior to the completion of the merger (including any provisions for acceleration), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common

 

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stock subject to such Noble Energy RSU award immediately prior to the completion of the merger by (ii) the merger consideration.

 

   

Each award of shares of restricted Noble Energy common stock, subject to vesting, repurchase or other lapse restriction solely based on continued service (a “Noble Energy RS award”), will be converted into an award, on the same terms and conditions as were applicable under such Noble Energy RS award immediately prior to the completion of the merger (including any provisions for acceleration) with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy RS award immediately prior to the completion of the merger by (ii) the merger consideration.

 

   

Each award of notional shares of restricted Noble Energy common stock, whose vesting is conditioned in full or in part based on achievement of performance goals or metrics (a “Noble Energy PS award”), will be converted into an award, on the same terms and conditions as were applicable under such Noble Energy PS award immediately prior to the completion of the merger (other than any performance-based vesting conditions), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy PS award (assuming that any performance-based vesting conditions applicable to such Noble Energy PS award for any performance period that has not been completed as of the effective time of the merger are achieved at the greater of “target” performance or actual performance as of the effective time of the merger) by (ii) the merger consideration.

 

   

Any amounts relating to dividend equivalent rights, if any, granted with respect to the foregoing Noble Energy equity awards that are accrued but unpaid as of the completion of the merger will carry over and will be paid if required by and in accordance with the terms and conditions as were applicable to such equity award immediately prior to the completion of the merger.

Q: What happens if I sell my shares of Noble Energy common stock after the record date but before the special meeting?

The record date for the special meeting (the close of business on [                    ], 2020) is earlier than the date of the special meeting and earlier than the date that the merger is expected to be completed. If you sell or otherwise transfer your shares of Noble Energy common stock after the record date but before the date of the special meeting, you will retain your right to vote at the special meeting. However, you will not have the right to receive the merger consideration to be received by Noble Energy stockholders in the merger. In order to receive the merger consideration, you must hold your shares through completion of the merger.

Q: Are there any risks that I should consider in deciding whether to vote in favor of the merger proposal?

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page [    ]. You also should read and carefully consider the risk factors of Chevron and Noble Energy contained in the documents that are incorporated by reference into this proxy statement/prospectus.

Q: What should I do if I receive more than one set of voting materials?

If you hold shares of Noble Energy common stock in “street name” and also directly as a record holder or otherwise or if you hold shares of Noble Energy common stock in more than one brokerage account, you may receive more than one set of voting materials relating to the special meeting. Please complete, sign, date and return each proxy card (or cast your vote by telephone or internet as provided on your proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your shares of Noble Energy common stock are voted. If you hold your shares in “street name” through a broker, bank or other nominee, you should follow the procedures provided by your broker, bank or other nominee to vote your shares.

 

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Q: Who will tabulate and certify the vote?

Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party, will tabulate and certify the vote, and will have a representative to act as the independent inspector of election for the special meeting.

Q: Where can I find the voting results of the special meeting?

The preliminary voting results will be announced at the special meeting. In addition, within four business days following certification of the final voting results, Noble Energy intends to file the final voting results with the SEC on a Current Report on Form 8-K.

Q: Whom should I contact if I have any questions about the proxy materials or voting?

If you have any questions about the proxy materials, or if you need assistance submitting your proxy or voting your shares or need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact the proxy solicitation agent for Noble Energy, at:

 

 

LOGO

1407 Broadway, 27th Floor

New York, New York 10018

Email: NBL@mackenziepartners.com

Call Collect: (212) 929-5500

Toll-Free: (800) 322-2885

 

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SUMMARY

This summary highlights selected information contained in this proxy statement/prospectus and does not contain all the information that may be important to you. Chevron and Noble Energy urge you to read carefully this proxy statement/prospectus in its entirety, including the annexes. Additional important information, which Chevron and Noble Energy also urge you to read, is contained in the documents incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page [    ]. Unless stated otherwise, all references in this proxy statement/prospectus to Chevron are to Chevron Corporation, all references to Noble Energy are to Noble Energy, Inc. and all references to the merger agreement are to the Agreement and Plan of Merger, dated as of July 20, 2020, by and among Chevron Corporation, Chelsea Merger Sub Inc. and Noble Energy, Inc., a copy of which is attached as Annex A to this proxy statement/prospectus.

Information about the Companies

Chevron

Chevron is a global energy company that explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemicals and additives; generates power; and develops and deploys technologies that enhance business value in every aspect of Chevron’s operations. It has substantial business activities in Angola, Argentina, Australia, Bangladesh, Brazil, Canada, China, Colombia, Indonesia, Kazakhstan, Myanmar, Nigeria, the Partitioned Zone between the Kingdom of Saudi Arabia and Kuwait, the Philippines, Republic of Congo, Singapore, South Korea, Thailand, the United Kingdom, the United States and Venezuela.

Chevron manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to U.S. and international subsidiaries that engage in integrated energy and chemicals operations.

Chevron has two business segments —Upstream and Downstream. Its upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas; transporting crude oil by major international oil export pipelines; transporting, storage and marketing of natural gas; and a gas-to-liquids plant. Its downstream operations consist primarily of refining crude oil into petroleum products; marketing of crude oil and refined products; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses and fuel and lubricant additives. The upstream and downstream activities of Chevron and its equity affiliates are widely dispersed geographically, with operations and projects* in North America, South America, Europe, Africa, Asia and Australia.

Chevron is incorporated in Delaware. Its principal executive offices are located at 6001 Bollinger Canyon Road, San Ramon, California 94583-2324, and its telephone number is (925) 842-1000. Chevron’s website address is www.chevron.com. Information contained on Chevron’s website does not constitute part of this proxy statement/prospectus. Chevron’s common stock is publicly traded on the NYSE, under the ticker symbol “CVX.” Additional information about Chevron is included in documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page [    ].

 

* 

As used in this proxy statement/prospectus, the term “project” may describe new upstream development activity, individual phases in a multiphase development, maintenance activities, certain existing assets, new investments in downstream and chemicals capacity, investments in emerging and sustainable energy activities, and certain other activities. All of these terms are used for convenience only and are not intended as a precise description of the term “project” as it relates to any specific governmental law or regulation.



 

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Noble Energy

Noble Energy is an independent oil and natural gas exploration and production company committed to meeting the world’s growing energy needs and delivering leading returns to stockholders. Noble Energy operates a high-quality portfolio of assets onshore in the United States and offshore in the Eastern Mediterranean and off the west coast of Africa. Founded more than 85 years ago, Noble Energy is guided by its values, its commitment to safety, and respect for stakeholders, communities and the environment.

Noble Energy operates its business through the following segments: US onshore; Eastern Mediterranean; West Africa; Other International; and Midstream. The Midstream segment includes the consolidated accounts of Noble Midstream Partners LP (“Noble Midstream”), whose common units are publicly traded on Nasdaq under the ticker symbol “NBLX.” The geographical reportable segments (US onshore, Eastern Mediterranean, West Africa and Other International) are in the business of crude oil and natural gas acquisition and exploration, development, and production. The Midstream reportable segment develops, owns and operates domestic midstream infrastructure assets, as well as invests in other midstream projects, with current focus areas being the DJ and Delaware Basins.

Noble Energy is incorporated in Delaware. Its principal executive offices are located at 1001 Noble Energy Way, Houston, Texas 77070 and its telephone number is (281) 872-3100. Noble Energy’s website address is www.nblenergy.com. Information contained on Noble Energy’s website does not constitute part of this proxy statement/prospectus. Noble Energy’s common stock is publicly traded on Nasdaq, under the ticker symbol “NBL.” Additional information about Noble Energy is included in documents incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page [    ].

Merger Subsidiary

Merger Subsidiary, a direct, wholly-owned subsidiary of Chevron, is a Delaware corporation incorporated on July 17, 2020 for the purpose of effecting the merger. Merger Subsidiary has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement, including the preparation of applicable regulatory filings in connection with the merger. The principal executive offices of Merger Subsidiary are located at 6001 Bollinger Canyon Road, San Ramon, California 94583-2324.

The Merger

On July 20, 2020, Chevron, Noble Energy and Merger Subsidiary entered into the merger agreement, which provides that upon the terms and subject to the conditions set forth therein and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), Merger Subsidiary will merge with and into Noble Energy, with Noble Energy continuing as the surviving corporation and a direct, wholly-owned subsidiary of Chevron.

Merger Consideration

In the merger, each share of Noble Energy common stock that is issued and outstanding immediately prior to the effective time of the merger (other than (i) cancelled shares and (ii) certain shares of Noble Energy common stock subject to stock-based awards that will be treated in the manner described under the heading “The Merger—Treatment of Noble Energy Stock Options and Other Stock-Based Awards”) will be converted into the right to receive the merger consideration, consisting of 0.1191 of a validly issued, fully paid and non-assessable share of Chevron common stock. The exchange ratio is fixed and will not be adjusted to reflect changes in the stock price of either company prior to the closing of the merger. The exchange ratio will, however, be adjusted appropriately to fully reflect the effect of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon, with respect to outstanding shares of capital stock of either Chevron or Noble Energy with a record date between the date of the merger agreement and the



 

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completion of the merger. No fractional shares of Chevron common stock will be issued in connection with the merger. Each holder of Noble Energy common stock that otherwise would have been entitled to receive a fractional share of Chevron common stock immediately prior to the effective time of the merger will have the right to receive an amount in cash, without interest, rounded to the nearest cent, in lieu of such fractional share. The value of such cash payment will be calculated by the exchange agent and will represent the holder’s proportionate interest in a trust of proceeds established from the open-market sale of that number of shares of Chevron common stock equal to the excess of (i) the aggregate number of shares of Chevron common stock to be delivered to the exchange agent by Chevron pursuant to the terms of the merger agreement over (ii) the aggregate number of whole shares of Chevron common stock to be distributed to the holders of certificates or book-entry shares previously representing any such shares of Noble Energy common stock pursuant to the merger agreement.

Chevron stockholders will continue to own their existing shares of Chevron common stock, the form of which will not be changed by the transaction.

Treatment of Noble Energy Stock Options and Other Stock-Based Awards

Upon completion of the merger, each outstanding Noble Energy stock option will be converted into an option to acquire, on the same terms and conditions as were applicable under such Noble Energy stock option immediately prior to the completion of the merger (including any provisions for acceleration), the number (rounded down to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy stock option immediately prior to the completion of the merger by (ii) the merger consideration.

The exercise price per share of Chevron common stock subject to any such converted Noble Energy stock option at and after completion of the merger will be an amount (rounded up to the nearest one hundredth of a cent) equal to (i) the exercise price per share of Noble Energy common stock subject to such Noble Energy stock option immediately prior to the completion of the merger divided by (ii) the merger consideration.

Upon completion of the merger, each outstanding cash-settled Noble Energy RSU award will be converted into a Chevron RSU award on the same terms and conditions as were applicable under such Noble Energy RSU award immediately prior to the completion of the merger (including any provisions for acceleration), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy RSU award immediately prior to the completion of the merger by (ii) the merger consideration.

Upon completion of the merger, each outstanding Noble Energy RS award will be converted into an award, on the same terms and conditions as were applicable under such Noble Energy RS award immediately prior to the completion of the merger (including any provisions for acceleration), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy RS award immediately prior to the completion of the merger by (ii) the merger consideration.

Upon completion of the merger, each outstanding Noble Energy PS award, will be converted into an award, on the same terms and conditions as were applicable under such Noble Energy PS award immediately prior to the completion of the merger (other than any performance-based vesting conditions), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy PS award (assuming that any performance-based vesting conditions applicable to such Noble Energy PS award for any performance period that has not been completed as of the effective time of the merger are achieved at the greater of “target” performance or actual performance as of the effective time of the merger) by (ii) the merger consideration.



 

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Any amounts relating to dividend equivalent rights, if any, granted with respect to the foregoing Noble Energy equity awards that are accrued but unpaid as of the completion of the merger will carry over and will be paid if required by and in accordance with the terms and conditions as were applicable to such equity award immediately prior to the completion of the merger.

For a more complete discussion of the treatment of Noble Energy stock options, Noble Energy RSU awards, Noble Energy RS awards or Noble Energy PS awards, see “The Merger Agreement—Merger Consideration—Treatment of Noble Energy Stock Options and Other Stock-Based Awards” beginning on page [    ].

Recommendations of the Noble Energy Board

After careful consideration, the Noble Energy Board unanimously recommends that holders of Noble Energy common stock vote “FOR” the merger proposal.

After careful consideration, the Noble Energy Board unanimously recommends that holders of Noble Energy common stock vote “FOR” the merger-related compensation proposal.

After careful consideration, the Noble Energy Board unanimously recommends that holders of Noble Energy common stock vote “FOR” the adjournment proposal.

For a more complete description of the Noble Energy Board’s reasons for the transaction and the recommendation of the Noble Energy Board, see “The Merger—Noble Energy Board’s Recommendation and Its Reasons for the Transaction” beginning on page [    ].

Opinion of Noble Energy’s Financial Advisor

At the meeting of the Noble Energy Board on July 19, 2020, J.P. Morgan Securities LLC (which we refer to as “J.P. Morgan”), the financial advisor of Noble Energy in connection with the merger, rendered its oral opinion to the Noble Energy Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the merger consideration to be paid to holders of Noble Energy common stock in the proposed merger was fair, from a financial point of view, to such holders. J.P. Morgan subsequently confirmed its oral opinion by delivering its written opinion to the Noble Energy Board, dated as of July 20, 2020, that, as of such date, the consideration to be paid to the holders of Noble Energy common stock in the proposed merger was fair, from a financial point of view, to such holders.

The full text of the written opinion of J.P. Morgan dated July 20, 2020, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Noble Energy’s shareholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Noble Energy Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the merger consideration to be paid to the holders of Noble Energy common stock in the merger and did not address any other aspect of the merger. The opinion does not constitute a recommendation to any shareholder of Noble Energy as to how such shareholder should vote with respect to the proposed merger or any other matter.

For a description of the opinion that the Noble Energy Board received from J.P. Morgan, see “The Merger—Opinion of Noble Energy’s Financial Advisor” beginning on page [    ]. A copy of the opinion of J.P. Morgan, Noble Energy’s financial advisor, is attached as Annex B to this proxy statement/prospectus.



 

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Interests of Directors and Executive Officers of Noble Energy in the Merger

You should be aware that some of the directors and executive officers of Noble Energy have interests in the merger that are different from, or are in addition to, the interests of stockholders generally. These interests include the following:

 

   

The executive officers of Noble Energy have arrangements with Noble Energy that provide for certain severance payments or benefits, accelerated vesting of certain equity-based awards and other rights and other payments or benefits upon completion of the merger and/or if their employment or service is terminated under certain circumstances following the completion of the merger;

 

   

The directors of Noble Energy have arrangements with Noble Energy that provide for accelerated vesting of certain equity-based awards if their service if terminated under certain circumstances following the completion of the merger; and

 

   

Executive officers and directors of Noble Energy have rights to indemnification, advancement of expenses and directors’ and officers’ liability insurance that will survive the completion of the merger.

The Noble Energy Board was aware of these additional interests by their directors and executive officers and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and the merger, in approving the merger agreement and in recommending the applicable merger-related proposals. For a further discussion of the interests of Noble Energy directors and executive officers in the merger, see “The Merger—Interests of Directors and Executive Officers of Noble Energy in the Merger” beginning on page [    ].

Material U.S. Federal Income Tax Consequences of the Merger

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and Chevron and Noble Energy intend to report the merger consistent with such qualification. However, it is not a condition to Noble Energy’s obligation or Chevron’s obligation to complete the transactions that the merger be treated as a “reorganization.” Such treatment depends, in part, upon the conclusion that the Debentures constitute indebtedness, and not equity, for U.S. federal income tax purposes. Noble Energy believes that under current law the Debentures constitute indebtedness for U.S. federal income tax purposes, has consistently reported the Debentures as indebtedness for U.S. federal income tax purposes on its U.S. federal income tax returns and has otherwise treated the Debentures consistently with such characterization. The matter is not, however, free from doubt, and there is no controlling authority on the question. If the IRS were successfully to assert that the Debentures constitute equity rather than indebtedness for U.S. federal income tax purposes, the merger would generally be treated as a taxable transaction in which U.S. holders of Noble Energy common stock would recognize gain or loss for U.S. federal income tax purposes. Noble Energy and Chevron have not sought, and will not seek, any ruling from the IRS regarding any matters relating to the transactions, and as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth herein. See “The Merger—Material U.S. Federal Income Tax Consequences” beginning on page [    ] for additional information. As provided in the merger agreement, none of Chevron, Noble Energy or any subsidiary of either will have any liability to any Noble Energy stockholder should the merger fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes.

Accounting Treatment of the Merger

The merger will be accounted for as an acquisition of Noble Energy by Chevron under the acquisition method of accounting in accordance with accounting principles generally accepted in the U.S. (“GAAP”). For additional information, see “The Merger—Accounting Treatment of the Merger” beginning on page [    ].



 

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No Appraisal Rights

Noble Energy stockholders are not entitled to appraisal rights in connection with the merger. For additional information, see “The Merger—No Appraisal Rights” beginning on page [    ].

Regulatory Approvals Required for the Merger

The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which provide that certain transactions may not be completed until notification and report forms are furnished to the Antitrust Division of the U.S. Department of Justice (“DOJ”) and the U.S. Federal Trade Commission (“FTC”) and the HSR Act waiting period is terminated or expires. On August 3, 2020, Chevron and Noble Energy each filed their respective requisite notification and report form under the HSR Act with the DOJ and the FTC. Completion of the merger is further subject to any applicable waiting period, clearance or affirmative approval from certain foreign regulators being obtained and any mandatory waiting period thereto having expired.

Conditions to Completion of the Merger

The parties expect to complete the merger after all of the conditions to the merger in the merger agreement are satisfied or waived, including after the merger agreement has been adopted by the stockholders of Noble Energy. The parties currently expect to complete the transaction in the fourth quarter of 2020. However, it is possible that factors outside of each company’s control could require them to complete the transaction at a later time or not to complete it at all.

In addition to the approval of the merger proposal by Noble Energy stockholders and the expiration or termination of the applicable waiting period under the HSR Act and any applicable waiting period, clearance or affirmative approval of certain governmental authorities, each party’s obligation to complete the merger is also subject to the satisfaction (or, to the extent permitted by law and in accordance with the merger agreement, waiver) of other conditions, including: the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part (and the absence of any stop order by the SEC), approval of the listing on the NYSE of the Chevron common stock to be issued in the merger, the absence of any legal or regulatory prohibition on completion of the merger, the accuracy of the representations and warranties of the other party under the merger agreement (subject to the materiality standards set forth in the merger agreement), the performance by the other party of its respective obligations under the merger agreement in all material respects and delivery of an officer’s certificate by the other party certifying satisfaction of the two preceding conditions.

Neither Chevron nor Noble Energy can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [    ].

Treatment of Existing Debt

Following the merger, Chevron currently expects to leave outstanding approximately $5.9 billion aggregate principal amount of Noble Energy’s outstanding long-term debt, excluding finance lease obligations, as well as approximately $1.6 billion aggregate principal amount of Noble Midstream’s outstanding long-term debt, excluding finance lease obligations.

For more information regarding the treatment of existing debt, see “The Merger—Treatment of Existing Debt” beginning on page [    ].



 

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No Solicitation

In the merger agreement, Noble Energy has agreed that it and its subsidiaries will not, and that it will direct and use its reasonable best efforts to cause its and its subsidiaries’ respective officers, directors, employees, investment bankers, consultants, attorneys, accountants, agents and other representatives not to, directly or indirectly:

 

   

take any action to solicit, initiate, or knowingly encourage or knowingly facilitate the making of any acquisition proposal involving Noble Energy or any inquiry with respect to an acquisition proposal;

 

   

engage in discussions or negotiations with any person with respect to an acquisition proposal (except to notify them of the existence of the applicable provisions of the merger agreement);

 

   

disclose any nonpublic information or afford access to properties, books or records to, any person that has made, or to Noble Energy’s knowledge is considering making, an acquisition proposal; or

 

   

propose publicly or agree to do any of the foregoing.

Subject to the exceptions contained in the merger agreement, Noble Energy has also agreed that Noble Energy and its subsidiaries will not (i) enter into, or approve or recommend, or propose to approve or recommend, any letter of intent, agreement in principle, merger agreement, option agreement, acquisition agreement or other agreement constituting or relating to an acquisition proposal, (ii) make, facilitate or provide information in connection with any SEC or other regulatory filings in connection with the transactions contemplated by any acquisition proposal, or (iii) seek any third-party consents in connection with any transactions contemplated by any acquisition proposal.

The merger agreement includes customary exceptions such that, prior to obtaining the Noble Energy stockholder approval, Noble Energy may furnish information and access, and may engage in discussions and negotiations regarding an acquisition proposal, if (i) the Noble Energy Board concludes in good faith, after (x) receipt of the advice of a financial advisor of nationally recognized reputation and outside legal counsel, that such acquisition proposal constitutes or could reasonably be expected to result in a superior proposal and (y) taking into account any revisions to the terms of the merger or the merger agreement proposed by Chevron after Chevron is notified of such acquisition proposal pursuant to the terms of the merger agreement, that failure to do so would be reasonably likely to be inconsistent with its fiduciary duties to Noble Energy’s stockholders under applicable law and (ii) Noble Energy receives from the person making such an acquisition proposal an executed confidentiality agreement and complies with certain specified procedures. For a discussion of what constitutes an acquisition proposal or a superior proposal and the limitations on solicitation of acquisition proposals, see “The Merger Agreement—Covenants and Agreements—No Solicitation” beginning on page [    ].

Termination of the Merger Agreement; Termination Fees

Termination

The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger:

 

   

By the mutual written consent of Chevron and Noble Energy.

 

   

By either Chevron or Noble Energy:

 

   

if the merger has not been completed by January 20, 2021 (or, if the reason for not closing by January 20, 2021 is that the regulatory conditions specified in the merger agreement have not been satisfied by that date, and all other closing conditions of the parties have been satisfied (other than those conditions that by their terms are to be satisfied at the closing, each of which is capable of



 

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being satisfied at the closing), or duly waived, April 20, 2021), provided that neither Chevron nor Noble Energy can terminate the merger agreement due to the occurrence of the end date if its failure to fulfill any obligation under the merger agreement has principally caused or resulted in the failure to complete the merger on or before such end date; or

 

   

if the Noble Energy stockholder approval of the merger proposal has not been obtained by reason of the failure to obtain the required vote at a duly held meeting of stockholders or any adjournment thereof; or

 

   

if there is any law or regulation that makes consummation of the merger illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining Chevron or Noble Energy from consummating the merger is entered and such judgment, injunction, order or decree becomes final and nonappealable; provided that this right to terminate the merger agreement will not be available to any party whose failure to fulfill any obligation under the covenant to use reasonable best efforts has principally caused or resulted in the imposition of such legal restraint or the failure of such legal restraint to be resisted, resolved or lifted; or

 

   

if there has been a breach by the other party of any of its representations, warranties, covenants or agreements contained in the merger agreement, which breach results in the failure to satisfy certain conditions to the obligations of Chevron and Merger Subsidiary (in the case of a breach by Noble Energy) or certain conditions to the obligations of Noble Energy to the merger (in the case of a breach by Chevron), and such breach is incapable of being cured or, if capable of being cured, has not been cured within 30 days after written notice thereof to the party alleged to be in breach.

 

   

By Chevron:

 

   

prior to receipt of the Noble Energy stockholder approval of the merger proposal, if there has been a change in the Noble Energy recommendation (as defined below), whether or not permitted by the terms of the merger agreement (or the Noble Energy Board or any committee thereof resolves to effect a change in the Noble Energy recommendation).

 

   

By Noble Energy:

 

   

at any time prior to receipt of the Noble Energy stockholder approval of the merger proposal in order to enter into a definitive written agreement providing for a superior proposal, provided that (i) Noble Energy has received a superior proposal after the date of the merger agreement that did not result from a breach of certain provisions of the merger agreement, (ii) Noble Energy has complied with the provisions of the merger agreement with respect to such superior proposal, (iii) concurrently with, and as a condition to, any such termination Noble Energy pays or causes to be paid to Chevron (or its designee) the termination fee (as defined below) pursuant to the merger agreement and (iv) the Noble Energy Board has authorized Noble Energy to enter into, and the Noble Energy concurrently enters into, a definitive written agreement providing for such superior proposal (it being agreed that Noble Energy may enter into such definitive written agreement concurrently with any such termination).

If the merger agreement is terminated as described above, the merger agreement will be void and have no effect, and there will be no liability or obligation on the part of any party, except that:

 

   

certain provisions contained in the merger agreement with respect to the effect of termination, the allocation of costs and expenses and the termination fee will survive the termination of the merger agreement;

 

   

the agreements contained in the confidentiality agreement between Chevron and Noble Energy will survive the termination of the merger agreement; and



 

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no termination will relieve any party of any liability or damages resulting from any material and intentional breach by that party of the merger agreement.

Termination Fees

The merger agreement further provides that Noble Energy will pay or cause to be paid to Chevron a termination fee of $176,295,000 in connection with a termination of the merger agreement under the following circumstances:

 

   

if Chevron terminates the merger agreement, prior to receipt of the Noble Energy stockholder approval of the merger proposal, due to a change in the Noble Energy Board’s recommendation with respect to the merger proposal, then Noble Energy will pay or cause to be paid $176,295,000 not later than the date of termination of the merger agreement;

 

   

if (i) the merger agreement is terminated by Noble Energy or Chevron due to the Noble Energy stockholder approval of the merger proposal not having been obtained by reason of the failure to obtain the required vote at a duly held meeting of stockholders or any adjournment thereof and (ii) on or before the date of such termination an acquisition proposal (defined for this purpose with all references to 20% in the definition of acquisition proposal (found on page [    ]) being replaced with “50%”) has been made and become publicly known, whether or not withdrawn, prior to the special meeting, then Noble Energy will pay or cause to be paid $176,295,000 not later than the date an acquisition proposal is consummated or a definitive agreement is entered into by Noble Energy providing for any such acquisition proposal, so long as such acquisition proposal is consummated or such definitive agreement is executed within 12 months after the date of termination;

 

   

if (i) the merger agreement is terminated by Noble Energy or Chevron due to the failure to consummate the merger by the end date and the Noble Energy stockholder approval of the merger proposal has not theretofore been obtained and (ii) on or before the date of such termination an acquisition proposal has been made and become publicly known, whether or not withdrawn, prior to the date of such termination, then Noble Energy will pay or cause to be paid $176,295,000 not later than the date an acquisition proposal (defined for this purpose with all references to 20% in the definition of acquisition proposal (found on page [    ]) being replaced with “50%”) is consummated or a definitive agreement is entered into by Noble Energy providing for any such acquisition proposal, so long as such acquisition proposal is consummated or such definitive agreement is executed within 12 months after the date of termination;

 

   

if (i) the merger agreement is terminated by Chevron due to a breach by Noble Energy of any of its representations, warranties, covenants or agreements, which breach resulted in the failure to satisfy one or more of certain conditions to the obligations of Chevron and Merger Subsidiary to consummate the merger and the Noble Energy stockholder approval of the merger proposal has not theretofore been obtained and (ii) on or before the date of such termination an acquisition proposal has been made and become publicly known, whether or not withdrawn, prior to the date of such termination, then Noble Energy will pay or cause to be paid $176,295,000 not later than the date an acquisition proposal (defined for this purpose with all references to 20% in the definition of acquisition proposal (found on page [    ]) being replaced with “50%”) is consummated or a definitive agreement is entered into by Noble Energy providing for any acquisition proposal, so long as any such acquisition proposal is consummated or such definitive agreement is executed within 12 months after the date of termination; or

 

   

if the merger agreement is terminated by Noble Energy due to its entry into a definitive agreement with respect to a superior proposal, then Noble Energy will pay or cause to be paid $176,295,000 not later than the date of termination of the merger agreement.



 

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For a more detailed discussion of each party’s termination rights and the related termination fee obligations, see “The Merger Agreement—Termination of the Merger Agreement” beginning on page [    ].

Special Meeting

Date, Time, Place and Purpose

The special meeting will be held virtually at www.virtualshareholdermeeting.com/NBL2020SM, on [                    ], 2020, at [            ], Central Time. The special meeting can be accessed by visiting www.virtualshareholdermeeting.com/NBL2020SM, where Noble Energy stockholders will be able to participate and vote online. At the special meeting, Noble Energy stockholders will be asked to consider and vote on the merger proposal, the merger-related compensation proposal and the adjournment proposal. Completion of the merger is conditioned on the approval of the merger proposal.

Noble Energy has chosen to hold the special meeting solely via live webcast and not in a physical location given the current public health impact of COVID-19 and its desire to promote the health and safety of its stockholders, directors, officers, employees and other constituents.

Purpose of the Noble Energy Special Meeting

At the Noble Energy special meeting, Noble Energy stockholders will be asked to consider and vote solely on the following proposals:

 

   

Merger proposal: to vote on a proposal to adopt the merger agreement, which is further described in the sections titled “The Merger” and “The Merger Agreement”, beginning on pages [    ] and [    ], respectively, and a copy of which is attached as Annex A to the proxy statement/prospectus;

 

   

Merger-related compensation proposal: To approve, on an advisory (non-binding) basis, the payments that will or may be paid to Noble Energy’s named executive officers that is based on or otherwise related to the merger; and

 

   

Adjournment proposal: To approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement.

Recommendation of the Noble Energy Board

The Noble Energy Board has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of Noble Energy stockholders, approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and directed that the merger agreement be submitted to the Noble Energy stockholders for adoption at a meeting of such stockholders, and unanimously recommends that Noble Energy stockholders vote:

 

   

“FOR” the merger proposal;

 

   

“FOR” the merger-related compensation proposal; and

 

   

“FOR” the adjournment proposal.

See “The Merger—Noble Energy Board Recommendation and Its Reasons for the Merger.”

Record Date; Stockholders Entitled to Vote

Only holders of record of Noble Energy common stock at the close of business on [                    ], 2020, the record date, will be entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof.



 

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At the close of business on the record date, there were [            ] shares of Noble Energy common stock outstanding. Each share of Noble Energy common stock outstanding on the record date entitles the holder thereof to one vote on each proposal to be considered at the special meeting. Noble Energy stockholders may vote virtually or by proxy through the internet or by telephone or by a properly executed and delivered proxy card with respect to the special meeting.

A complete list of stockholders entitled to vote at the special meeting will be available for a period of at least ten days prior to the special meeting. If you would like to inspect the list of Noble Energy stockholders of record, please call the Investor Relations department at (281) 872-3100 to schedule an appointment or request access. A certified list of eligible Noble Energy stockholders will be available for inspection during the special meeting at www.virtualshareholdermeeting.com/NBL2020SM by entering the control number provided on your proxy card, voting instruction form or notice.

Quorum; Abstentions and Broker Non-Votes

A quorum of Noble Energy stockholders is necessary for Noble Energy to hold the special meeting. The holders of a majority of the outstanding shares of Noble Energy common stock entitled to vote at the special meeting must be present in person or represented by proxy in order to constitute a quorum. Virtual attendance at the special meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the special meeting.

If you submit a properly executed proxy card, even if you do not vote on any proposal or vote to “abstain” in respect of the proposal, your shares of Noble Energy common stock will be counted for purposes of calculating whether a quorum is present for the transaction of business at the special meeting. Noble Energy common stock held in “street name” with respect to which the beneficial owner fails to give voting instructions to the broker, bank or other nominee, and Noble Energy common stock with respect to which the beneficial owner otherwise fails to vote, will not be considered present at the special meeting for the purpose of determining the presence of a quorum.

A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and the broker, bank or other nominee does not have discretionary authority to vote the shares. If you hold your shares of Noble Energy common stock in street name and do not provide voting instructions to your broker, bank or other nominee, your shares will be considered to be broker non-votes and will not be considered to be present at the special meeting for the purpose of determining the presence of a quorum.

Required Vote to Approve the Merger Proposal

Approval of the merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of Noble Energy common stock entitled to vote thereon. Failures to vote, broker non-votes and abstentions will have the same effect as votes cast “AGAINST” the merger proposal. Virtual attendance at the special meeting constitutes presence in person for purposes of the vote required under Noble Energy’s By-Laws.

Required Vote to Approve the Merger-Related Compensation Proposal

Approval of the merger-related compensation proposal requires the affirmative vote of holders of a majority of the outstanding shares of Noble Energy common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. Failures to vote and broker non-votes will have no effect on the vote for the merger-related compensation proposal (assuming a quorum is present). Abstentions will have the same effect as votes cast “AGAINST” the merger-related compensation proposal. Virtual attendance at the special meeting constitutes presence in person for purposes of the vote required under Noble Energy’s By-Laws.



 

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Required Vote to Approve the Adjournment Proposal

Approval of the adjournment proposal requires the affirmative vote of holders of a majority of the outstanding shares of Noble Energy common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. Failures to vote and broker non-votes will have no effect on the vote for this proposal (assuming a quorum is present). Abstentions will have the same effect as votes cast “AGAINST” the adjournment proposal. Virtual attendance at the special meeting constitutes presence in person for purposes of the vote required under Noble Energy’s By-Laws.

Voting by Noble Energy’s Directors and Executive Officers

At the close of business on [                    ], 2020, the most recent practicable date for which such information was available, directors and executive officers of Noble Energy and their respective affiliates owned and were entitled to vote [            ] shares of Noble Energy common stock, representing approximately [    ]% of the shares of Noble Energy common stock outstanding on that date. The number and percentage of shares of Noble Energy common stock owned by directors and executive officers of Noble Energy and their respective affiliates as of the record date are not expected to be meaningfully different from the number and percentage as of [                    ], 2020. Noble Energy currently expects its directors and executive officers to vote their shares of Noble Energy common stock in favor of each of the proposals to be voted on at the special meeting, but no director or executive officer has entered into any agreement obligating him or her to do so.

Risk Factors

You should consider all the information contained in, and incorporated by reference into, this proxy statement/prospectus in deciding how to vote for the proposals presented in the proxy statement/prospectus. In particular, you should consider the factors described under “Risk Factors” beginning on page [    ].



 

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SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial information is being provided to assist you in your analysis of the financial aspects of the transaction.

The Chevron annual historical information is derived from the audited consolidated financial statements of Chevron as of and for each of the years in the five-year period ended December 31, 2019. The Chevron data as of and for the six months ended June 30, 2020 and 2019 has been derived from the unaudited interim financial statements of Chevron and, in the opinion of Chevron’s management, includes all normal and recurring adjustments that are considered necessary for the fair presentation of the results for those interim periods.

The Noble Energy annual historical information is derived from the audited consolidated financial statements of Noble Energy as of and for each of the years in the five-year period ended December 31, 2019. The Noble Energy data as of and for the six months ended June 30, 2020 and 2019 has been derived from the unaudited interim financial statements of Noble Energy and, in the opinion of Noble Energy’s management, includes all normal and recurring adjustments that are considered necessary for the fair presentation of the results for those interim periods.

The information is only a summary and should be read in conjunction with each company’s historical consolidated financial statements and related notes contained in Chevron’s and Noble Energy’s respective Annual Reports on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the period ended June 30, 2020 and June 30, 2019, in each case which are incorporated by reference into this proxy statement/prospectus, as well as other information that has been filed with the SEC. For information on where you can obtain copies of this information, see “Where You Can Find More Information” beginning on page [    ]. The historical results included below and elsewhere in this proxy statement/prospectus or incorporated by reference herein are not necessarily indicative of the future performance of Chevron or Noble Energy following the transaction.

Chevron Corporation

 

    As of and for the  
    Six Months Ended
June 30,
    Year Ended December 31,  
(in millions, except per-share amounts)   2020     2019     2019     2018     2017     2016     2015  
    (unaudited)                                

Statement of Income data

             

Revenues and Other Income

             

Total sales and other operating revenues*

  $ 45,631     $ 70,512     $ 139,865     $ 158,902     $ 134,674     $ 110,215     $ 129,925  

Income (Loss) from equity affiliates and other income

    (636     3,538       6,651       7,437       7,048       4,257       8,552  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues and Other Income

    44,995       74,050       146,516       166,339       141,722       114,472       138,477  

Total Costs and Other Deductions

    51,447       64,158       140,980       145,764       132,501       116,632       133,635  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (Loss) Before Income Tax Expense (Benefit)

    (6,452     9,892       5,536       20,575       9,221       (2,160     4,842  

Income Tax Expense (Benefit)

    (1,756     2,960       2,691       5,715       (48     (1,729     132  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss)

    (4,696     6,932       2,845       14,860       9,269       (431     4,710  

Less: Net income (loss) attributable to noncontrolling interests

    (25     (22     (79     36       74       66       123  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss) Attributable to Chevron Corporation

  $ (4,671   $ 6,954     $ 2,924     $ 14,824     $ 9,195     $ (497   $ 4,587  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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    As of and for the  
    Six Months Ended
June 30,
    Year Ended December 31,  
(in millions, except per-share amounts)   2020     2019     2019     2018     2017     2016     2015  
    (unaudited)                                

*Includes excise, value-added and similar taxes:

  $ —       $ —       $ —       $ —       $ 7,189     $ 6,905     $ 7,359  

Per Share of Common Stock

             

Net Income (Loss) Attributable to Chevron

             

—Basic

  $ (2.51   $ 3.68     $ 1.55     $ 7.81     $ 4.88     $ (0.27   $ 2.46  

—Diluted

  $ (2.51   $ 3.66     $ 1.54     $ 7.74     $ 4.85     $ (0.27   $ 2.45  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash Dividends Per Share

  $ 2.58     $ 2.38     $ 4.76     $ 4.48     $ 4.32     $ 4.29     $ 4.28  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Data

             

Current assets

  $ 23,732     $ 33,087     $ 28,329     $ 34,021     $ 28,560     $ 29,619     $ 34,430  

Noncurrent assets

    199,671       222,791       209,099       219,842       225,246       230,459       230,110  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

    223,403       255,878       237,428       253,863       253,806       260,078       264,540  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Short-term debt

    3,751       5,588       3,282       5,726       5,192       10,840       4,927  

Other current liabilities

    17,074       23,241       23,248       21,445       22,545       20,945       20,540  

Long-term debt

    30,302       25,061       23,691       28,733       33,571       35,286       33,622  

Other noncurrent liabilities

    37,890       44,537       41,999       42,317       43,179       46,285       51,565  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities

    89,017       98,427       92,220       98,221       104,487       113,356       110,654  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Chevron Corporation Stockholders’ Equity

  $ 134,118     $ 156,395     $ 144,213     $ 154,554     $ 148,124     $ 145,556     $ 152,716  

Noncontrolling interests

    268       1,056       995       1,088       1,195       1,166       1,170  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Equity

  $ 134,386     $ 157,451     $ 145,208     $ 155,642     $ 149,319     $ 146,722     $ 153,886  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noble Energy, Inc.

 

    As of and for the  
    Six Months Ended
June 30,
    Year Ended December 31,  
(in millions, except share amounts)   2020     2019     2019     2018     2017     2016     2015  
    (unaudited)                                

Revenues and Income

             

Total Revenues

  $ 1,591     $ 2,145     $ 4,438     $ 4,986     $ 4,256     $ 3,491     $ 3,183  

Asset Impairments(1)

    2,754       —         1,160       206       70       92       533  

Net Loss and Comprehensive Loss Attributable to Noble Energy

    (4,371     (323     (1,512     (66     (1,118     (998     (2,441

Per Share Data, Attributable to Noble Energy

             

Loss per Share—Basic and Diluted

  $ (9.11   $ (0.68   $ (3.16   $ (0.14   $ (2.38   $ (2.32   $ (6.07

Cash Dividends per Share

    0.14       0.23       0.47       0.43       0.40       0.40       0.72  

Stock Price per Share

    8.96       22.40       24.84       18.76       29.14       38.06       32.93  

Weighted Average Number of Shares Outstanding

             

Basic and Diluted

    480       478       478       483       469       430       402  


 

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    As of and for the  
    Six Months Ended
June 30,
    Year Ended December 31,  
(in millions, except share amounts)   2020     2019     2019     2018     2017     2016     2015  
    (unaudited)                                

Cash Flows

             

Net Cash Provided by Operating Activities

  $ 400     $ 1,092     $ 1,998     $ 2,336     $ 1,951     $ 1,351     $ 2,062  

Additions to Property, Plant and Equipment

    724       1,405       2,524       3,279       2,649       1,541       2,979  

Net Proceeds from Divestitures(2)

    18       123       173       1,999       2,073       1,241       151  

Proceeds from Issuance of Noble Energy Common Stock, Net of Offering Costs

    —         —         —         —         —         —         1,112  

Proceeds from Issuance of Noble Midstream Common Units, Net of Offering Costs

    —         99       243       —         312       299       —    

Financial Position

             

Cash and Cash Equivalents

  $ 324     $ 470     $ 484     $ 716     $ 675     $ 1,180     $ 1,028  

Property, Plant and Equipment, Net

    12,986       18,775       17,451       18,419       17,502       18,548       21,300  

Total Assets

    15,899       21,649       20,647       21,120       21,476       21,011       24,196  

Long-term Obligations

             

Long-Term Debt

    7,936       6,866       7,477       6,574       6,746       7,011       7,976  

Total Shareholders’ Equity

    4,662       10,104       9,055       10,484       10,619       9,600       10,370  

 

(1)

See Item 8. Financial Statements and Supplementary Data—Note 10. Impairments in Noble Energy’s Annual Report on Form 10-K for the year ended December 31, 2019 and Item 1. Financial Statements—Note 4. Impairments in Noble Energy’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

(2)

See Item 8. Financial Statements and Supplementary Data—Note 4. Acquisitions and Divestitures in Noble Energy’s Annual Report on Form 10-K for the year ended December 31, 2019 and Item 1. Financial Statements—Note 5. Acquisitions, Divestitures and Equity Method Investments in Noble Energy’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.



 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA

COMBINED PER SHARE INFORMATION

The following table sets forth selected historical per share information of Chevron and Noble Energy and unaudited pro forma combined consolidated per share information reflecting the transaction between Chevron and Noble Energy, under the acquisition method of accounting, including the issuance of 0.1191 of a validly issued, fully paid and non-assessable share of Chevron common stock in exchange for each share of Noble Energy common stock. You should read this information in conjunction with (i) the selected historical financial information and the related notes included elsewhere in this proxy statement/prospectus, and (ii) the historical financial statements of Chevron and Noble Energy and related notes contained in Chevron’s and Noble Energy’s respective Annual Reports on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the period ended June 30, 2020, which are incorporated by reference into this proxy statement/prospectus. The historical per share information is derived from audited financial statements of each of Chevron and Noble Energy as of and for the year ended December 31, 2019 and their respective unaudited financial statements for the six months ended June 30, 2020.

The unaudited pro forma combined consolidated per share information has been presented for illustrative purposes only and is based on assumptions and estimates considered appropriate by Chevron’s management. The pro forma data presented does not represent what the actual results of operations and financial position would have been had the companies actually been combined as of the beginning of the periods presented and is not necessarily indicative of the future consolidated results of operations or financial position of Chevron following the transaction. For example, the unaudited pro forma combined consolidated per share information does not reflect cost savings or other future financial impacts that may result from the transaction.

Chevron and Noble Energy declared and paid dividends during the periods presented. For more information on dividends of Chevron and Noble Energy, see “Comparative Per Share Market Price and Dividend Information” beginning on page [    ].

 

     As of/For
the Six
Months
Ended
June 30,
2020
    As of/For
the Year
Ended
December 31,
2019
 

Chevron Historical per Common Share Data:

    

Net income-basic

   $ (2.51   $ 1.55  

Net income-diluted

     (2.51     1.54  

Book value(1)

     72.38       77.20  

Noble Energy Historical per Common Share Data:

    

Net income-basic

   $ (9.11   $ (3.16

Net income-diluted

     (9.11     (3.16

Book value(1)

     8.34       17.58  

Unaudited Pro Forma Combined per Chevron Common Share Data:

    

Net income-basic

   $ (4.72   $ 0.68  

Net income-diluted

     (4.72     0.67  

Book value(1)

     72.89       N/A  

Unaudited Pro Forma Combined per Noble Energy Equivalent Share Data:

    

Net income-basic(2)

   $ (0.56   $ 0.08  

Net income-diluted(2)

     (0.56     0.08  

Book value(1)(2)

     8.68       N/A  


 

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(1)

Amount is calculated by dividing stockholders’ equity by shares of common stock outstanding. Pro forma book value per share as of December 31, 2019, is not meaningful as the estimated pro forma adjustments were calculated as June 30, 2020.

(2)

Amounts calculated by multiplying unaudited pro forma combined per share amounts by the exchange ratio in the merger (0.1191 of a share of Chevron common stock for each share of Noble Energy common stock).



 

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

Market Prices

Chevron common stock trades on the NYSE under the symbol “CVX” and Noble Energy common stock trades on Nasdaq under the symbol “NBL”. As of [                    ], 2020, the last date before the date of this proxy statement/prospectus for which it was practicable to obtain this information, there were [            ] shares of Chevron common stock outstanding and approximately [            ] holders of record of Chevron common stock, and [            ] shares of Noble Energy common stock outstanding and approximately [            ] holders of record of Noble Energy common stock.

On July 17, 2020, the last trading day before the public announcement of the signing of the merger agreement, the closing sale price per share of Chevron common stock was $87.19 on the NYSE and the closing sale price per share of Noble Energy common stock was $9.66 on Nasdaq. On [                    ], 2020, the latest practicable date before the date of this proxy statement/prospectus, the closing sale price per share of Chevron common stock was $[        ] on the NYSE and the closing sale price per share of Noble Energy common stock was $[        ] on Nasdaq. The table below sets forth the equivalent market value per share of Noble Energy common stock on July 17, 2020 and [                    ], 2020, as determined by multiplying the closing prices of shares of Chevron common stock on those dates by the exchange ratio of 0.1191.

 

     Chevron Common
Stock
     Noble Energy
Common Stock
     Implied Per Share
Value of Merger
Consideration
 

July 17, 2020

   $ 87.19      $ 9.66      $ 10.38  

[                     ], 2020

   $ [                $ [                $ [            

The market prices of Chevron common stock and Noble Energy common stock have fluctuated since the date of the announcement of the merger agreement and will continue to fluctuate from the date of this proxy statement/prospectus to the date of the special meeting and the date the merger is completed and thereafter. No assurance can be given concerning the market prices of Chevron common stock or Noble Energy common stock before completion of the merger or Chevron common stock after completion of the merger. The exchange ratio is fixed in the merger agreement, but the market price of Chevron common stock (and therefore the value of the merger consideration) when received by Noble Energy stockholders after the merger is completed will depend on the closing price of Chevron common stock on the day such stockholders receive their shares of Chevron common stock pursuant to the merger agreement. Such market price could be greater than, less than or the same as shown in the table above. Accordingly, Noble Energy stockholders are advised to obtain current market quotations for Chevron common stock and Noble Energy common stock in deciding whether to vote for adoption of the merger agreement.

Dividends

Chevron currently pays a quarterly dividend on shares of Chevron common stock and last paid a dividend on June 10, 2020 of $1.29 per share. On July 29, 2020, the Chevron Board authorized a dividend of $1.29 per share, to be paid on September 10, 2020 to Chevron stockholders of record as of August 19, 2020. Under the terms of the merger agreement, during the period before completion of the merger, Chevron is not permitted to declare, set aside or pay any dividend or other distribution other than its regular cash dividend in the ordinary course of business consistent with past practice, and in any event will not include any special dividend.

Noble Energy currently pays a quarterly dividend on shares of Noble Energy common stock and last paid a dividend on May 26, 2020 of $0.02 per share to Noble Energy stockholders of record at the close of business on May 11, 2020. On July 28, 2020, Noble Energy announced that the Noble Energy Board had declared a quarterly dividend of $0.02 per share payable on August 24, 2020, to the shareholders of record at the close of business on August 10, 2020. Under the terms of the merger agreement, during the period before completion of the merger,



 

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Noble Energy is not permitted to declare, set aside or pay any dividend or other distribution other than its regular cash dividend in the ordinary course of business consistent with past practice, which, (i) in the case of Noble Energy, will not exceed $0.02 per share of Noble Energy common stock per fiscal quarter and (ii) in the case of Noble Midstream, will not include any special dividend.

Furthermore, under the merger agreement, Chevron and Noble Energy have agreed to coordinate with each other regarding the declaration and payment of dividends in respect of their common stock and the record dates and payment dates relating thereto, so as to ensure that Noble Energy stockholders do not receive two dividends, or fail to receive one dividend, in any quarter with respect to shares of Noble Energy common stock and the shares of Chevron common stock that such holders receive in exchange therefor in the merger. Noble Energy will ensure that the date on which any quarterly dividend is declared and the record date with respect to any quarterly dividend will be no later than five business days following the one-year anniversary of such dates for the corresponding quarter of the preceding year. In the quarter in which the closing of the merger occurs, if the record date of Chevron’s quarterly dividend has been declared and is a date prior to the effective time of the merger, then the quarterly dividend declaration date and record date of Noble Energy must occur no later than such date as is necessary to ensure that holders of Noble Energy common stock receive a quarterly dividend in accordance with the first sentence of this paragraph.

After completion of the merger, each former Noble Energy stockholder who holds shares of Chevron common stock into which shares of Noble Energy common stock have been converted in connection with the merger will receive all dividends or other distributions declared and paid on shares of Chevron common stock with a record date on or after the completion of the merger. However, no dividend or other distribution having a record date after completion of the merger will actually be paid with respect to any shares of Chevron common stock into which shares of Noble Energy common stock have been converted in connection with the merger until the certificates formerly representing shares of Noble Energy common stock have been surrendered or the book-entry shares formerly representing shares of Noble Energy common stock have been transferred to the exchange agent in accordance with the merger agreement, at which time any such accrued dividends and other distributions on those shares of Chevron common stock will be paid without interest. Subject to the limitations set forth in the merger agreement described above, any future dividends by Chevron will be made at the discretion of the Chevron Board. Subject to the limitations set forth in the merger agreement described above, any future dividends by Noble Energy will be made at the discretion of the Noble Energy Board. There can be no assurance that any future dividends will be declared or paid by Chevron or Noble Energy or as to the amount or timing of those dividends, if any.

For more details regarding dividends, see “The Merger Agreement—Conduct of Business—Coordination of Dividends” beginning on page [    ].



 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements with respect to the potential transaction between Chevron and Noble Energy, including any statements regarding the expected timetable for completing the potential transaction, the ability to complete the potential transaction, the expected benefits and synergies of the potential transaction, projected financial information, future opportunities, and any other statements regarding Chevron’s and Noble Energy’s future expectations, beliefs, plans, objectives, results of operations, financial condition and cash flows, or future events or performance. These statements are often, but not always, made through the use of words or phrases such as “anticipates”, “expects”, “intends”, “plans”, “targets”, “forecasts”, “projects”, “believes”, “seeks”, “schedules”, “estimates”, “positions”, “pursues”, “may”, “could”, “should”, “will”, “budgets”, “outlook”, “trends”, “guidance”, “focus”, “on schedule”, “on track”, “is slated”, “goals”, “objectives”, “strategies”, “opportunities”, “poised”, “potential” and similar expressions. All such forward-looking statements are based on current expectations of Chevron’s and Noble Energy’s management and therefore involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Key factors that could cause actual results to differ materially from those projected in the forward-looking statements include, but are not limited to:

 

   

the risk that Noble Energy stockholders may not approve the merger agreement;

 

   

uncertainties as to the timing to consummate the merger;

 

   

the uncertainty of the value of the merger consideration due to the fixed exchange ratio and potential fluctuation in the market price of Chevron common stock;

 

   

the occurrence of events that may give rise to a right of one or both of the parties to terminate the merger agreement, including under circumstances that might require Noble Energy to pay or cause to be paid a termination fee of $176,295,000 to Chevron;

 

   

the possibility that the merger is delayed or does not occur;

 

   

the risk that the conditions to closing the merger may not be satisfied in a timely manner or at all;

 

   

the risk that regulatory approvals are not obtained or are obtained subject to conditions that are not anticipated by the parties;

 

   

the effects of disruption to Chevron’s or Noble Energy’s respective businesses;

 

   

negative effects of the announcement of Chevron’s proposal to acquire Noble Energy or the announcement or completion of the merger on the market price of Chevron’s and/or Noble Energy’s common stock, their respective financial performance and their respective ability to maintain relationships with suppliers and customers;

 

   

the risks related to Chevron and Noble Energy being restricted in the operation of their respective businesses while the merger agreement is in effect;

 

   

the effects of industry, market, economic, political or regulatory conditions outside of Chevron’s or Noble Energy’s control;

 

   

Chevron and Noble Energy may incur significant transaction and other costs in connection with the merger in excess of those anticipated by Chevron or Noble Energy;

 

   

any litigation relating to the merger and other unknown liabilities;

 

   

Chevron’s ability to achieve the benefits, including operating and other cost synergies, from the proposed transaction;

 

   

Chevron’s ability to promptly, efficiently and effectively integrate acquired operations into its own operations;

 

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the ultimate timing, outcome and results of integrating the operations of Chevron and Noble Energy;

 

   

the ability of Noble Energy to retain and hire key personnel;

 

   

the diversion of management time on transaction-related issues;

 

   

changing crude oil and natural gas prices and demand for Chevron’s or Noble Energy’s products and production curtailments due to market conditions;

 

   

crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries and other producing countries;

 

   

public health crises, such as pandemics (including coronavirus (COVID-19)) and epidemics, and any related government policies and actions;

 

   

changing economic, regulatory and political environments in the various countries in which each of Chevron and Noble Energy operate;

 

   

general domestic and international economic and political conditions;

 

   

changing refining, marketing and chemicals margins;

 

   

Chevron’s ability to realize anticipated cost savings, expenditure reductions and efficiencies associated with enterprise transformation initiatives;

 

   

actions of competitors or regulators;

 

   

timing of exploration expenses;

 

   

the competitiveness of alternate-energy sources or product substitutes;

 

   

timing of crude oil liftings;

 

   

technological developments;

 

   

the results of operations and financial condition of Chevron’s or Noble Energy’s suppliers, vendors, partners and equity affiliates, particularly during extended periods of low prices for crude oil and natural gas during the COVID-19 pandemic;

 

   

the inability or failure of Chevron’s or Noble Energy’s joint-venture partners to fund their share of operations and development activities;

 

   

the potential failure to achieve expected net production from existing and future crude oil and natural gas exploration and development projects;

 

   

potential delays in the development, construction or start-up of planned projects;

 

   

the potential disruption or interruption of Chevron’s or Noble Energy’s operations due to war, accidents, political events, civil unrest, severe weather, cyber threats, terrorist acts, or other natural or human causes beyond Chevron’s or Noble Energy’s control;

 

   

the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation;

 

   

significant operational, investment or product changes required by existing or future environmental statutes and regulations, including international agreements and national or regional legislation and regulatory measures to limit or reduce greenhouse gas emissions;

 

   

the potential liability resulting from pending or future litigation;

 

   

Chevron’s future acquisitions or dispositions of assets or shares or the delay or failure of such transactions to close based on required closing conditions;

 

   

the potential for gains and losses from asset dispositions or impairments;

 

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government-mandated sales, divestitures, recapitalizations, industry-specific taxes, tariffs, sanctions, changes in fiscal terms or restrictions on scope of Chevron’s operations;

 

   

foreign currency movements compared with the U.S. dollar;

 

   

material reductions in corporate liquidity and access to debt markets;

 

   

the receipt of required board authorizations to pay future dividends to Chevron stockholders;

 

   

the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies;

 

   

Chevron’s ability to identify and mitigate the risks and hazards inherent in operating in the global energy industry; and

 

   

other risk factors as detailed from time to time in Chevron’s and Noble Energy’s reports filed with the SEC, including Chevron’s and Noble Energy’s respective Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC, including the risks and uncertainties set forth in or incorporated by reference into this proxy statement/prospectus in the section entitled “Risk Factors” beginning on page [    ]. See the section entitled “Where You Can Find More Information” beginning on page [    ] of this proxy statement/prospectus.

These forward-looking statements reflect Chevron’s and Noble Energy’s current views with respect to future events and are based on numerous assumptions and assessments made by Chevron and Noble Energy in light of their experience and perception of historical trends, current conditions, business strategies, operating environments, future developments and other factors they believe appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this document could cause Chevron’s and Noble Energy’s plans with respect to the merger, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this document are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this proxy statement/prospectus or, in the case of a document incorporated by reference, as of the date of that document. Neither Chevron nor Noble Energy assumes any obligation to update the information contained in this document (whether as a result of new information, future events or otherwise), except as required by applicable law.

 

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RISK FACTORS

In addition to the other information included in and incorporated by reference into this proxy statement/prospectus, including, among others, the matters addressed in “Cautionary Note Regarding Forward-Looking Statements” beginning on page [    ], Noble Energy stockholders should carefully consider the following risk factors before deciding whether to vote for the proposal to adopt the merger agreement. In addition, you should read and consider the risks associated with each of the businesses of Noble Energy and Chevron because these risks will relate to Chevron following the completion of the merger. Descriptions of some of these risks can be found in the respective Annual Reports of Chevron and Noble Energy on Form 10-K for the fiscal year ended December 31, 2019, as such risks may be updated or supplemented in each company’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are incorporated by reference into this proxy statement/prospectus. You should also consider the other information in this document and the other documents incorporated by reference into this document. See “Where You Can Find More Information” beginning on page [    ].

Risks Related to the Merger

The merger is subject to conditions, some or all of which may not be satisfied, or completed on a timely basis, if at all. Failure to complete the merger in a timely manner or at all could have adverse effects on Noble Energy.

The completion of the merger is subject to a number of conditions, including, among others, (i) the approval by Noble Energy stockholders of the adoption of the merger agreement and (ii) U.S. and non-U.S. regulatory approvals, which make the completion and timing of the completion of the merger uncertain. For a more detailed discussion regarding conditions to the merger, see “The Merger Agreement—Conditions to Completion of the Merger”, beginning on page [    ]. Also, either Chevron or Noble Energy may terminate the merger agreement if the merger has not been consummated by January 20, 2021 (or April 20, 2021, if the end date is extended pursuant to the merger agreement), except that this right to terminate the merger agreement will not be available to any party whose failure to perform any obligation under the merger agreement has principally caused or resulted in the failure of the merger to be consummated on or before that date.

If the merger is not completed, Noble Energy’s ongoing business, financial condition, financial results and stock price may be materially adversely affected. Without realizing any of the benefits of having completed the merger, Chevron and Noble Energy will be subject to a number of risks, including the following:

 

   

the market price of Chevron common stock and/or Noble Energy common stock could decline to the extent that the current market price reflects a market assumption that the transaction will be completed;

 

   

Noble Energy could owe a termination fee of $176,295,000 to Chevron under certain circumstances;

 

   

if the merger agreement is terminated and the Chevron Board or the Noble Energy Board seeks another business combination, Chevron stockholders and Noble Energy stockholders cannot be certain that Chevron or Noble Energy will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that the other party has agreed to in the merger agreement;

 

   

time and resources committed by Chevron’s and Noble Energy’s respective management to matters relating to the merger could otherwise have been devoted to pursuing other beneficial opportunities for their respective companies;

 

   

Chevron and/or Noble Energy may experience negative reactions from the financial markets or from their respective customers, suppliers or employees;

 

   

Chevron and Noble Energy will be required to pay their respective costs relating to the merger, such as legal, accounting, financial advisory and printing fees, whether or not the merger is completed; and

 

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litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against Chevron or Noble Energy to perform their respective obligations pursuant to the merger agreement.

In addition, if the merger is not completed, Chevron and/or Noble Energy could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against Chevron or Noble Energy to perform their respective obligations under the merger agreement. The materialization of any of these risks could adversely impact Chevron’s and Noble Energy’s respective ongoing businesses, financial condition, financial results and stock price. Similarly, delays in the completion of the merger could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with uncertainty about completion of the merger.

If the merger does not qualify as a “reorganization” under Section 368(a) of the Code, the stockholders of Noble Energy may be required to pay substantial U.S. federal income taxes.

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and Chevron and Noble Energy intend to report the merger consistent with such qualification. However, it is not a condition to Noble Energy’s obligation or Chevron’s obligation to complete the transactions that the merger be treated as a “reorganization.” Such treatment depends, in part, upon the conclusion that the Debentures constitute indebtedness, and not equity, for U.S. federal income tax purposes. Noble Energy believes that under current law the Debentures constitute indebtedness for U.S. federal income tax purposes, has consistently reported the Debentures as indebtedness for U.S. federal income tax purposes on its U.S. federal income tax returns and has otherwise treated the Debentures consistently with such characterization. The matter is not, however, free from doubt, and there is no controlling authority on the question. If the IRS were successfully to assert that the Debentures constitute equity rather than indebtedness for U.S. federal income tax purposes, the merger would generally be treated as a taxable transaction in which U.S. holders of Noble Energy common stock would recognize gain or loss for U.S. federal income tax purposes. If the IRS or a court determines that the merger should not be treated as a “reorganization” within the meaning of Section 368(a) of the Code, a holder of Noble Energy common stock would generally recognize taxable gain or loss upon the exchange of Noble Energy common stock for Chevron common stock pursuant to the merger. See “The Merger—Material U.S. Federal Income Tax Consequences” beginning on page [     ]. As provided in the merger agreement, none of Chevron, Noble Energy or any subsidiary of either will have any liability to any Noble Energy stockholder should the merger fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes.

The merger agreement contains provisions that limit Noble Energy’s ability to pursue alternatives to the merger, could discourage a potential competing acquiror of Noble Energy from making a favorable alternative transaction proposal and, in specified circumstances, could require Noble Energy to pay a termination fee to Chevron.

The merger agreement contains certain provisions that restrict Noble Energy’s ability to initiate, solicit, knowingly encourage or facilitate or, subject to certain exceptions, engage in discussions or negotiations with respect to, or approve or recommend, any third-party proposal for an alternative transaction. Further, even if the Noble Energy Board withdraws or qualifies its recommendation with respect to the adoption of the merger agreement, unless the merger agreement has been terminated in accordance with its terms, Noble Energy will still be required to submit each of its merger-related proposals to a vote at the special meeting. In addition, Chevron generally has an opportunity to offer to modify the terms of the transactions contemplated by the merger agreement in response to any third-party alternative transaction proposal before the Noble Energy Board may withdraw or qualify its recommendation with respect to the merger-related proposal or otherwise terminate the merger agreement.

 

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In some circumstances, upon termination of the merger agreement, Noble Energy will be required to pay a termination fee of $176,295,000 to Chevron. See the sections titled “Summary—No Solicitation” and “The Merger Agreement—Termination of the Merger Agreement” beginning on pages [    ] and [    ], respectively.

These provisions could discourage a potential third-party acquiror or merger partner that might have an interest in acquiring all or a significant portion of Noble Energy or pursuing an alternative transaction from considering or proposing such a transaction, even if it were prepared to pay consideration with a higher per share cash or market value than the per share cash or market value proposed to be received or realized in the merger. In particular, the termination fee, if applicable, could result in a potential third-party acquiror or merger partner proposing to pay a lower price to the Noble Energy stockholders than it might otherwise have proposed to pay absent such a fee.

If the merger agreement is terminated and Noble Energy determines to seek another business combination, Noble Energy may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the merger.

The merger is subject to the expiration or termination of applicable waiting periods and the receipt of approvals, consents or clearances from regulatory authorities that may impose conditions that could have an adverse effect on Noble Energy and/or Chevron following the transaction or, if not obtained, could prevent completion of the merger.

Before the merger may be completed, any waiting period (or extension thereof) applicable to the merger must have expired or been terminated, and any approvals, consents or clearances required in connection with the merger must have been obtained, in each case, under applicable law. In deciding whether to grant the required regulatory approval, consent or clearance, the relevant governmental entities will consider the effect of the merger on competition within their relevant jurisdiction. The terms and conditions of the approvals, consents and clearances that are granted may impose requirements, limitations or costs or place restrictions on the conduct of the business of Chevron following the transaction. Under the merger agreement, Chevron and Noble Energy have agreed to use their respective reasonable best efforts to obtain as soon as practicable all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any third party or governmental body, agency, authority or official which are necessary, proper or advisable to consummate the merger, except that Chevron may not be required to undertake, or to request or authorize Noble Energy to undertake, any efforts or to take any action if such efforts or action would, or would reasonably be expected to, result in changes or effects that would, individually or in the aggregate, result in, or be reasonably likely to result in, a substantial detriment. As used in this proxy statement/prospectus “substantial detriment” means changes or effects which, individually or in the aggregate (and after giving effect to any reasonably expected proceeds of any divestiture or sale of assets) would result in, or be reasonably likely to result in, a material adverse effect on Noble Energy and its subsidiaries, taken as a whole, at or after the effective time of the merger. Any requirement to divest or hold separate or limit the operation of any of the businesses, assets or properties owned by Chevron and its subsidiaries prior to the effective time of the merger will be deemed to result in a substantial detriment if such action with respect to a comparable amount of assets or businesses of Noble Energy and its subsidiaries, taken together with all other such actions taken, would be reasonably likely, in the aggregate, to have a material adverse effect on Noble Energy and its subsidiaries, taken as a whole, at or after the effective time of the merger.

In addition, regulators may impose conditions, terms, obligations or restrictions in connection with their approval of or consent to the merger, and such conditions, terms, obligations or restrictions may delay completion of the merger or impose additional material costs on or materially limit Chevron’s revenues following the completion of the merger. There can be no assurance that regulators will choose not to impose such conditions, terms, obligations or restrictions, and, if imposed, such conditions, terms, obligations or restrictions may delay or lead to the abandonment of the merger. For a more detailed description of the regulatory review process, see the section entitled “The Merger—Regulatory Approvals Required for the Merger” beginning on page [     ].

 

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The exchange ratio is fixed and will not be adjusted in the event of any change in either Chevron’s or Noble Energy’s stock price.

Upon completion of the merger, each share of Noble Energy common stock will be converted into the right to receive 0.1191 of a validly issued, fully paid and non-assessable share of Chevron common stock. This exchange ratio was fixed in the merger agreement and will not be adjusted for changes in the market price of either Chevron common stock or Noble Energy common stock between the date the merger agreement was signed and completion of the merger. Due to the fixed exchange ratio, fluctuations in the price of Chevron common stock will drive corresponding changes in the value of the merger consideration payable to each Noble Energy stockholder. As a result, changes in the price of Chevron common stock prior to the completion of the merger will affect the market value that Noble Energy stockholders will become entitled to receive on the date of the closing. Stock price changes may result from a variety of factors (many of which are beyond Chevron’s or Noble Energy’s control), such as changes in Chevron’s or Noble Energy’s respective business, operations and prospects; changing crude oil and natural gas prices, as well as crude oil production quotas; overall demand for crude oil and natural gas commodities; the continued effects of the COVID-19 pandemic and governmental and business responses to the pandemic; and changes in government rules and regulations in the countries in which each of Chevron and Noble Energy operate.

The price of Chevron common stock has fluctuated during the period between the date the merger agreement was executed and the date of this proxy statement/prospectus, and may continue to change through the date of the special meeting and the date the merger is completed. For example, based on the range of closing prices of Chevron common stock during the period from July 17, 2020, the last full trading day before the public announcement of the merger, through [                    ], 2020, the latest practicable trading date before the date of this proxy statement/prospectus, the exchange ratio represented the market value of the merger consideration ranging from a high of $[        ] to a low of $[        ] for each share of Noble Energy common stock. The actual market value of the Chevron common stock received by holders of Noble Energy common stock upon completion of the merger may be outside this range.

These variations could result from changes in the business, operations or prospects of Chevron or Noble Energy prior to or following the completion of the merger, regulatory considerations, general market and economic conditions and other factors both within and beyond the control of Chevron or Noble Energy. At the time of the special meeting, Noble Energy stockholders will not know with certainty the value of the shares of Chevron common stock that they will receive upon completion of the merger.

Members of the Noble Energy Board and management have interests in the merger that are different from, or in addition to, those of other stockholders.

In considering whether to adopt the merger agreement and approve the transactions contemplated thereby, Noble Energy stockholders should recognize that members of management and the Noble Energy Board have interests in the merger that differ from, or are in addition to, their interests as stockholders of Noble Energy.

The executive officers of Noble Energy have arrangements with Noble Energy that provide for certain severance payments or benefits, accelerated vesting of certain equity-based awards and other rights and other payments or benefits upon completion of the merger and/or if their employment or service is terminated under certain circumstances following the completion of the merger. The directors of Noble Energy have arrangements with Noble Energy that provide for accelerated vesting of certain equity-based awards if their service is terminated under certain circumstances following the completion of the merger. In addition, the executive officers and directors of Noble Energy also have rights to indemnification, advancement of expenses and directors’ and officers’ liability insurance that will survive the completion of the merger. The Noble Energy Board was aware of these interests and considered them, among other matters, in approving the merger agreement and making its recommendation that the Noble Energy stockholders vote “FOR” the merger proposal and “FOR” the merger-related compensation proposal.

 

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These interests are further described in “The Merger—Interests of Directors and Executive Officers of Noble Energy in the Merger” beginning on page [    ].

Each party is subject to business uncertainties and contractual restrictions while the proposed merger is pending, which could adversely affect each party’s business and operations.

In connection with the pendency of the merger, it is possible that some customers, suppliers and other persons with whom Chevron or Noble Energy has a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with Chevron or Noble Energy, as the case may be, as a result of the merger. Under the terms of the merger agreement, each of Chevron and Noble Energy is subject to certain restrictions on the conduct of its respective business prior to completing the merger, which may adversely affect Chevron’s ability to acquire assets or Noble Energy’s ability to execute certain of its business strategies, including, with respect to Noble Energy, the ability in certain cases to enter into or amend contracts, acquire or dispose of assets, incur indebtedness or incur capital expenditures. Such limitations could adversely affect each party’s businesses and operations prior to the completion of the merger. See “The Merger Agreement—Covenants and Agreements—Conduct of Business” beginning on page [    ].

Each of the risks described above may be exacerbated by delays or other adverse developments with respect to the completion of the merger.

The opinion of Noble Energy’s financial advisor will not reflect changes in circumstances between the signing of the merger agreement and the completion of the merger.

Noble Energy has received an opinion from its financial advisor in connection with the signing of the merger agreement, but has not obtained any updated opinion from its financial advisor as of the date of this proxy statement/prospectus. Changes in the operations and prospects of Chevron or Noble Energy, general market and economic conditions and other factors that may be beyond the control of Chevron or Noble Energy, and on which Noble Energy’s financial advisor’s opinion was based, may significantly alter the value of Chevron or Noble Energy or the prices of the shares of Chevron common stock or Noble Energy common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. Because Noble Energy does not currently anticipate asking its financial advisor to update its opinion, the opinion will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed. The Noble Energy Board’s recommendation that Noble Energy stockholders vote “FOR” approval of the merger proposal, “FOR” the non-binding merger-related compensation proposal and “FOR” the adjournment proposal, however, is made as of the date of this proxy statement/prospectus.

For a description of the opinion that Noble Energy received from its financial advisor, see the section entitled “The Merger—Opinion of Noble Energy’s Financial Advisor” beginning on page [    ]. A copy of the opinion of J.P. Morgan, Noble Energy’s financial advisor, is attached as Annex B to this proxy statement/prospectus.

Noble Energy may be unable to retain key employees during the pendency of the merger.

In connection with the pending merger, Noble Energy’s current and prospective employees may experience uncertainty about their future roles with Chevron following the merger, which may materially adversely affect its ability to attract and retain key personnel during the pendency of the merger. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Chevron following the merger. Accordingly, no assurance can be given that Noble Energy will be able to retain key employees to the same extent that Noble Energy has been able to in the past.

 

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Potential litigation against Chevron and Noble Energy could result in substantial costs, an injunction preventing the completion of the merger and/or a judgment resulting in the payment of damages.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if such a lawsuit is unsuccessful, defending against these claims can result in substantial costs. An adverse judgment could result in monetary damages, which could have a negative impact on Chevron’s and Noble Energy’s respective liquidity and financial condition.

Stockholders of Noble Energy may file lawsuits against Chevron, Noble Energy and/or the directors and officers of either company in connection with the merger. These lawsuits could prevent or delay the completion of the merger and result in significant costs to Noble Energy and/or Chevron, including any costs associated with the indemnification of directors and officers. There can be no assurance that any of the defendants will be successful in the outcome of any potential lawsuits.

Completion of the merger may trigger change in control or other provisions in certain agreements to which Noble Energy is a party, which may have an adverse impact on Chevron’s business and results of operations after the merger.

The completion of the merger may trigger change in control and other provisions in certain agreements to which Noble Energy is a party. If Chevron and Noble Energy are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages. Even if Chevron and Noble Energy are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Noble Energy or Chevron following the transaction.

Noble Energy stockholders are not entitled to appraisal rights in connection with the merger.

Appraisal rights are statutory rights that enable stockholders to dissent from certain extraordinary transactions, such as certain mergers, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the applicable transaction. Under the DGCL, holders of shares of Noble Energy common stock will not have rights to an appraisal of the fair value of their shares in connection with the merger. See “The Merger—No Appraisal Rights” beginning on page [    ] for additional information.

The shares of Chevron common stock to be received by Noble Energy stockholders upon completion of the merger will have different rights from shares of Noble Energy common stock.

Upon completion of the merger, Noble Energy stockholders will no longer be stockholders of Noble Energy but will instead become stockholders of Chevron, and their rights as Chevron stockholders will be governed by the terms of Chevron’s certificate of incorporation, as amended (“Chevron’s certificate of incorporation”), and Chevron’s by-laws, as amended (“Chevron’s By-Laws”). The terms of Chevron’s certificate of incorporation and Chevron’s By-Laws are in some respects materially different than the terms of Noble Energy’s certificate of incorporation, as amended (“Noble Energy’s certificate of incorporation”), and Noble Energy’s By-Laws, which currently govern the rights of Noble Energy stockholders. See “Comparison of Rights of Stockholders of Chevron and Noble Energy” beginning on page [    ] for a discussion of the different rights associated with shares of Noble Energy common stock and shares of Chevron common stock.

Noble Energy stockholders will have a significantly reduced ownership and voting interest after the merger and will exercise less influence over the policies of Chevron following the transaction than they now have on the policies of Noble Energy.

Chevron stockholders currently have the right to vote in the election of the Chevron Board and on other matters affecting Chevron. Noble Energy stockholders currently have the right to vote in the election of the

 

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Noble Energy Board and on other matters affecting Noble Energy. Immediately after the merger is completed, it is expected that current Chevron stockholders will own approximately [    ]% of the shares of outstanding common stock of Chevron following the transaction, and current Noble Energy stockholders will own approximately [    ]% of the common stock outstanding of Chevron following the transaction. As a result, current Noble Energy stockholders will have significantly less influence on the policies of Chevron than they now have on the policies of Noble Energy.

Risks Relating to Chevron After Completion of the Merger

Chevron may not achieve the intended benefits and the merger may disrupt its current plans or operations.

There can be no assurance that Chevron will be able to successfully integrate Noble Energy’s assets or otherwise realize the expected benefits of the potential transaction (including operating and other cost synergies). Difficulties in integrating Noble Energy into Chevron may result in Chevron performing differently than expected, in operational challenges or in the failure to realize anticipated synergies and efficiencies in the expected timeframe or at all, in which case the merger may not be accretive to Chevron’s return on average capital employed (calculated as net income (loss) attributable to Chevron (adjusted for after-tax interest expense and noncontrolling interest) divided by average capital employed, which is computed by averaging the sum of capital employed at the beginning and end of the year), free cash flow (calculated as cash provided by operating activities less cash capital expenditures) and earnings per share within one year after the completion of the merger. The integration of the two companies may result in material challenges, including the diversion of management’s attention from ongoing business concerns; retaining key management and other employees; retaining or attracting business and operational relationships; the possibility of faulty assumptions underlying expectations regarding the integration process and associated expenses; consolidating corporate and administrative infrastructures and eliminating duplicative operations; coordinating geographically separate organizations; unanticipated issues in integrating information technology, communications and other systems; as well as potential unknown liabilities, unforeseen expenses relating to integration, or delays associated with the acquisition.

The market price of Chevron’s common stock after the merger may be affected by factors different from those affecting the price of Chevron or Noble Energy common stock before the merger.

Upon completion of the merger, holders of Chevron common stock and Noble Energy common stock will be holders of Chevron common stock. As the businesses of Chevron and Noble Energy are different, the results of operations as well as the price of Chevron’s common stock may in the future be affected by factors different from those factors affecting Chevron and Noble Energy as independent stand-alone companies. Chevron following the transaction will face additional risks and uncertainties that Chevron or Noble Energy may currently not be exposed to as independent companies.

The merger and other stock transactions could trigger a limitation on Chevron’s ability to use the historic net operating loss carryforwards of Noble Energy.

Chevron’s ability to utilize Noble Energy’s historic net operating loss carryforwards (“NOLs”) to reduce future taxable income following the consummation of the merger could be subject to various limitations under the Code. Section 382 of the Code generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone an “ownership change” (as determined under Section 382 of the Code). An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at least 5% of such corporation’s stock change their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. In the event that an ownership change occurs, utilization of Noble Energy’s NOLs would be subject to an annual limitation under Section 382 of the Code. Any unused annual limitation may be carried over to later years.

Chevron and Noble Energy believe that the transactions in connection with the merger, if consummated, will result in an ownership change with respect to Noble Energy. The expected ownership change with respect to

 

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Noble Energy may trigger a limitation (calculated as described above) on Chevron’s ability to utilize any historic NOLs of Noble Energy. This could cause some of Noble Energy’s NOLs incurred prior to January 1, 2018 to expire before Chevron would be able to utilize them to reduce taxable income in future periods.

The market price of Chevron’s common stock may decline as a result of the merger.

The market price of Chevron common stock may decline as a result of the merger if, among other things, it is unable to achieve the expected benefits and synergies of the potential transaction, if the merger is not completed within the anticipated timeframe or if the transaction costs related to the merger are greater than expected. The market price also may decline if Chevron does not achieve the perceived benefits and expected synergies of the transaction as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the merger on Chevron’s financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts.

The merger may result in a loss of customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners and may result in the termination of existing contracts.

Following the merger, some of the customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners of Noble Energy may terminate or scale back their current or prospective business relationships with Chevron. Some customers may not wish to source a larger percentage of their needs from a single company or may feel that Chevron is too closely allied with one of their competitors. In addition, Noble Energy has contracts with customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners that may require it to obtain consents from these other parties in connection with the merger, which may not be obtained on favorable terms or at all. If relationships with customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners are adversely affected by the merger, or if Chevron, following the merger, loses the benefits of the contracts of Noble Energy, Chevron’s business and financial performance could suffer.

Following the completion of the merger, Chevron may incorporate Noble Energy’s hedging activities into Chevron’s business, and Chevron may be exposed to additional commodity price risks arising from such hedges.

To mitigate its exposure to changes in commodity prices, Noble Energy hedges oil, natural gas and natural gas liquid (“NGL”) prices from time to time, primarily through the use of certain derivative instruments. If Chevron assumes existing Noble Energy hedges, then Chevron will bear the economic impact of all of Noble Energy’s current hedges following the completion of the merger. Actual crude oil, natural gas and NGL prices may differ from Chevron’s expectations and, as a result, such hedges may or may not have a negative impact on Chevron’s business.

Chevron’s By-Laws will govern Chevron following the merger and provide that a state or federal court located within the State of Delaware will be the exclusive forum for substantially all disputes between Chevron (after the merger) and its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with Chevron or its directors, officers or other employees.

Chevron’s By-laws provide that, unless Chevron consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of Chevron, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Chevron to Chevron or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Chevron reserves the right to assert that this exclusive forum provision applies to

 

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any derivative action or proceeding brought by a stockholder to procure a judgment in Chevron’s favor, including derivative actions purporting to assert on Chevron’s behalf any claims it possesses against third parties that arise under the federal securities laws (e.g., the Securities Act and the Exchange Act). It is, however, uncertain whether a court would enforce this exclusive forum provision with respect to a derivative action or proceeding brought by a stockholder to enforce Chevron’s rights under the Securities Act or Exchange Act. In addition, stockholders cannot waive, and this exclusive forum provision does not purport to waive, Chevron’s own compliance with the federal securities laws and the rules and regulations thereunder.

This exclusive forum provision may limit the ability of a stockholder, including a former Noble Energy stockholder who becomes a Chevron stockholder after the merger is completed, to bring a claim in a judicial forum of its choosing for disputes with Chevron or its directors, officers or other employees, which may discourage lawsuits against Chevron and its directors, officers and other employees. In addition, stockholders who do bring a claim in a state or federal court located within the State of Delaware could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. In addition, the court located in the State of Delaware may reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to Chevron than to its stockholders.

Other Risk Factors of Chevron and Noble Energy

Chevron’s and Noble Energy’s businesses are and will be subject to the risks described above. In addition, Chevron and Noble Energy are and will continue to be subject to the risks described in Chevron’s and Noble Energy’s respective Annual Reports on Form 10-K for the fiscal year ended December 31, 2019 as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. For the location of information incorporated by reference into this proxy statement/prospectus, see “Where You Can Find More Information” beginning on page [    ].

 

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THE MERGER

The following is a discussion of the transaction and the material terms of the merger agreement between Chevron and Noble Energy. You are urged to read the merger agreement carefully and in its entirety. A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus and incorporated by reference herein. This summary does not purport to be complete and may not contain all of the information about the merger that is important to you. This section is not intended to provide you with any factual information about Chevron or Noble Energy. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings Chevron and Noble Energy make with the SEC that are incorporated by reference into this document, as described in “Where You Can Find More Information” beginning on page [    ].

Background of the Merger

The Noble Energy Board of Directors and company management regularly review and assess Noble Energy’s performance, strategy, financial position and leverage, opportunities and risks in light of current business and economic conditions, as well as developments in the oil and gas exploration and production sector, and across a range of scenarios and potential future industry developments. These regular reviews have, at the direction of the Noble Energy Board, included evaluation of a variety of opportunities within its asset portfolio and potential strategic combinations, asset divestments and acquisition opportunities.

Over the past year and a half, the Noble Energy Board has engaged in a series of strategic reviews and strategy sessions in an effort to maximize stockholder value, leveraging the views of Noble Energy management and outside consultants (including J.P. Morgan Securities LLC (“J.P. Morgan”)). The Noble Energy Board has recognized that Noble Energy is unique given its relative scale and the diversity of its assets, both in terms of size and geography, and production mix. Noble Energy’s business has been focused on both U.S. onshore unconventional basins as well as large-scale, global offshore conventional operations in the Eastern Mediterranean and off the west coast of Africa. In addition, Noble Energy’s midstream business and equity method investments, primarily through its control of Noble Midstream, represent essential components of its business. The Noble Energy Board’s strategic reviews evaluated each of these components individually and as a whole, with a goal of achieving the maximum value of each component to drive stockholder value.

As part of these reviews and strategy sessions, the Noble Energy Board considered Noble Energy’s position in an industry that is undergoing dramatic changes as a result of increasingly negative investor sentiment following years of sector financial underperformance, concerns about the viability of fossil fuels and the impact of expanding environmental, social and governance matters and legal requirements. Investors have also increasingly focused on the ability of energy companies to operate within cash flow and to return capital to stockholders, either in the form of a dividend or share repurchases. The Noble Energy Board also considered that Noble Energy and many of its peers may have limited access to equity capital and intermittent access to debt capital markets in the future resulting in a high and increasing weighted average cost of capital. The Noble Energy Board also actively monitored the company’s financial condition, including its ability to adequately fund exploration opportunities and operational plans, particularly its large-scale offshore projects, while generating sufficient cash flow to provide meaningful return of capital to its stockholders.

Against this backdrop, at the end of 2018 and continuing through the first three quarters of 2019, Noble Energy engaged in a strategic review of its midstream business, including ways to potentially monetize the midstream business and reduce Noble Energy’s leverage. In reviewing the midstream business, the Noble Energy Board considered market dynamics, including decreased investor support for the master limited partnership (“MLP”) model and compression of valuations for sponsored MLPs. As a result, Noble Energy began reviewing two potential midstream transactions: (i) contributing Noble Energy’s other midstream assets to Noble Midstream, while simplifying the Noble Midstream structure through the exchange of incentive distribution rights in Noble Midstream indirectly held by Noble Energy for common units in Noble Midstream and (ii) engaging in a marketing effort, assisted by a leading investment bank, to sell its general partner and limited

 

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partner interest in Noble Midstream. With respect to the latter option, Noble Energy established a data room and engaged with multiple potential counterparties. Noble Energy planned to use the proceeds from the potential sale to reduce its outstanding indebtedness and/or return capital to stockholders.

On July 22, 2019, the Noble Energy Board conducted its annual strategy session with Noble Energy management in advance of its regularly scheduled meeting. The Noble Energy Board discussed a wide range of strategic issues and opportunities, including various commodity price outlooks, as well as the exploration and production industry structure, opportunities and challenges. With respect to commodity price outlook, the Noble Energy Board discussed (i) its expectation of slower future oil demand growth and range-bound oil prices ($45 to $65 per barrel, WTI) with significant potential volatility through time, (ii) the expectation of continued softness in U.S. natural gas prices and (iii) the likely impact of U.S. gas supply on global LNG pricing.

With respect to the industry, the Noble Energy Board observed that the U.S. exploration and production sector had been the worst performing investment sector over the previous five years and was characterized by high fragmentation, hyper-competitiveness and strong justification for consolidation. The Noble Energy Board also observed that the universe and market weighting of large capitalization, diversified exploration and production companies like Noble Energy showed decline and impact from a negative shift in general investor sentiment and significantly-reduced company valuations. The Noble Energy Board determined that in order to increase scale, reduce volatility and better deliver stockholder returns, cost efficiencies and sustainability, Noble Energy would likely need to participate in consolidation in some form, whether as an acquirer, through a merger-of-equals, or by combining with a well-capitalized major, integrated company.

In reaching this determination, the Noble Energy Board reviewed Noble Energy’s competitive position and discussed such factors as Noble Energy’s (i) strategic shift to a moderate growth focus, (ii) free cash flow generation ability in various commodity price conditions, (iii) competitive cost position, (iv) portfolio complexity, (v) absolute debt level and leverage relative to peers, (vi) potential increases in debt capital cost, (vii) potential intermittent access to debt capital markets; and (viii) potential inability to access additional equity capital. The Noble Energy Board further discussed the risk and the likely negative impacts to the company of a potential loss of its investment grade credit rating, including higher cost of, and less access to, capital and resulting challenges to the offshore business model. Also discussed was the valuation impact of asymmetric risks unique to its portfolio, particularly with respect to the concentration of onshore assets in the DJ Basin in Colorado, and political, security, market, economic and other risks associated with the Eastern Mediterranean assets.

As a result of these discussions, the Noble Energy Board directed management to identify potential paths to reduce indebtedness and volatility, create value, and manage and reduce portfolio risk, including (i) continuing to explore a sale of its interest in Noble Midstream (with the proceeds to be used to repay debt), (ii) partnering and engaging with smaller, comparably-sized and other companies to position Noble Energy to capitalize on potential onshore consolidation opportunities and (iii) potential transactions to address Eastern Mediterranean concentration risk, including a sell-down of Noble Energy’s interests.

Following this board meeting, Noble Energy management continued to test a sale of Noble Midstream, continued operational improvements, began exploring industry partnership opportunities, and evaluated the timing and structuring of potential actions to reduce volatility and perceived risk in its Eastern Mediterranean operations.

In the fall of 2019, Noble Energy received offers from a strategic midstream operator and a private equity-backed entity to purchase Noble Midstream. Neither offer was in a value range acceptable to the Noble Energy Board and both included additional operational commitments by Noble Energy that reduced overall value. As a result, Noble Energy concluded these efforts and shifted focus to an asset drop-down and simplification transaction with Noble Midstream. Several weeks later, with the approval of the Noble Energy Board, Noble Energy contributed its incentive distribution rights in Noble Midstream and Noble Energy’s U.S. onshore

 

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midstream assets to Noble Midstream for an additional $930 million in Noble Midstream common units and $670 million in cash. The cash proceeds were used to repay indebtedness outstanding under Noble Energy’s commercial paper program.

With respect to its Eastern Mediterranean assets, Noble Energy management concluded that the optimal time to consider selling a portion of its interest would be after the Leviathan field in Israel commenced natural gas production, which was expected on or about December 31, 2019. To explore such a possibility, Noble Energy contacted eight infrastructure-focused entities to measure third-party interest in acquiring a portion of Noble Energy’s interests in the region. Noble Energy entered into confidentiality agreements with several potential counterparties, provided due diligence materials and engaged in discussions over several months. These efforts did not result in any offers that were projected to increase value.

On October 23, 2019, Kevin Haggard, Noble Energy’s Vice President and Treasurer, met Frank Mount, Chevron’s General Manager, Mergers & Acquisitions, at an industry event and discussed general industry conditions. Mr. Mount advised that Chevron had been monitoring Noble Energy’s progress in the Eastern Mediterranean and requested a meeting with Noble Energy personnel focused on the region.

Around the same time period, David L. Stover, Noble Energy’s Chairman and Chief Executive Officer, received a phone call from the Chief Executive Officer of Company A, an independent energy company with operations in multiple U.S. basins, regarding industry consolidation and the importance of scale in light of commodity price uncertainty and volatility. While there was no discussion about a strategic transaction between the parties, they agreed to reconnect over the subsequent few weeks.

On December 3, 2019, Mr. Haggard, Amir Nebenzhal, Noble Energy’s Vice President of Business Development, and Mr. Mount met for dinner to discuss Noble Energy’s operations in the Eastern Mediterranean region. During this dinner, Mr. Mount indicated that Chevron was contemplating entry into the upstream sector in Egypt and indicated potential interest in regional cooperation.

Within a few days, Mr. Mount and Mr. Nebenzhal had a telephone call to discuss a potential path forward to determine if a transaction between Chevron and Noble Energy in the Eastern Mediterranean would be feasible. Because the exact nature of any potential transaction between the parties was unclear at this point, Messrs. Nebenzhal and Mount agreed it would be best for the parties to educate each other regarding their regional positions and views. Mr. Nebenzhal advised Mr. Mount that Noble Energy was not interested in a complete sale of its Eastern Mediterranean assets, but was potentially considering a partner to both reduce Noble Energy’s concentration risk and help accelerate the next phase of capital investment for growth needed in the region. Messrs. Mount and Nebenzhal agreed to reconnect early in the new year after the Leviathan start-up and once Chevron’s plans in Egypt became more firm.

On December 6, 2019, Mr. Stover met with the Chief Executive Officer of Company A regarding industry consolidation, including a high level discussion about a potential combination of Noble Energy and Company A. A follow-up call between the parties occurred on December 18, 2019, and the parties agreed to revisit discussions about a potential combination after the holidays.

On December 9, 2019, Mr. Stover had dinner with the Chief Executive Officer of Company B, an independent domestic energy company, who advised Mr. Stover that Company B was considering expanding its operations outside of the United States and was intrigued by Noble Energy’s high quality assets. The discussion included the benefits and obstacles of a combination of the two companies.

On December 11 and 12, 2019, the Noble Energy Board held a regularly scheduled, in person meeting, together with members of Noble Energy management. During the course of this meeting, Mr. Stover advised the Noble Energy Board of his discussions with Company A and Company B. The Noble Energy Board recommended that Mr. Stover continue discussions with Company A, but the Noble Energy Board was less interested in Company B due to the composition of Company B’s asset base.

 

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On December 31, 2019, Noble Energy announced the successful commencement of natural gas production from the Leviathan field.

On January 9, 2020, Mr. Nebenzhal informally met with the Chief Executive Officer, the Chief Financial Officer, and another executive of Company A. Mr. Nebenzhal and the Company A executives discussed the current state of the industry. In the course of the conversation, the Company A executives signaled that Company A was interested in low-decline gas assets and may have an interest in expanding its operations outside of the U.S.

On January 21, 2020, Mr. Stover met with Company A management at Company A’s corporate offices to further explore the viability of combining the two companies. The parties discussed risks and future opportunities and Company A’s concern about the scale and concentration of Noble Energy’s assets and operations outside the United States. The parties also discussed the complementary strategic fit of certain onshore U.S. assets. At the conclusion of the meeting, Company A’s management advised that the company planned to have a board level strategic review and committed to contact Noble Energy again after that review was completed.

On January 24, 2020, the Chief Executive Officer of Company A contacted Mr. Stover to advise that after reviewing the opportunities internally, the Company A board and management had decided not to continue discussions based on their belief that the timing was not right for Company A to dilute its focus on its U.S. unconventional resources.

On January 27 and 28, 2020, the Noble Energy Board held a regularly scheduled meeting with members of Noble Energy management. Following this meeting, the Noble Energy Board met in executive session to discuss the state of the exploration and production industry generally and Noble Energy’s position in the industry in particular. The Noble Energy Board determined that given investor sentiment toward the sector, environmental and climate concerns and increasing regulatory requirements, companies with a diversified portfolio of assets beyond traditional oil and gas, including renewables, would have a competitive advantage in the future, including with respect to free cash flow, value and sustainability. Similar to its views in July 2019, the Noble Energy Board concluded that to remain competitive in the future and to increase value, stability and diversification, Noble Energy would need to either become a consolidator to gain scale, or be sold to a larger, well-capitalized major, integrated company. Following this executive session, Scott D. Urban, Noble Energy Board’s Lead Independent Director, advised Mr. Stover of the sense of the Noble Energy Board and encouraged management to continue to pursue potential strategic transactions, including acquisitions, mergers-of-equals, and a sale of the company.

On February 2, 2020, Messrs. Nebenzhal and Haggard met with Mr. Mount and other Chevron business development representatives. Mr. Mount advised that he would be in the Eastern Mediterranean region in mid-February to announce a Chevron exploration agreement with Egypt, and he inquired as to whether he could visit the Leviathan facility. In a follow up call, Mr. Nebenzhal advised that Noble Energy could not grant the request at that time, in part due to the concern that Noble Energy hosting Chevron in the region could be disruptive to Noble Energy operations and lead to regional speculation. The parties agreed to enter into a mutual confidentiality agreement prior to holding more granular discussions, and that such discussions would involve a US-based mutual information sharing process to commence following Chevron’s Egypt announcement.

On February 4, 2020, Brent Smolik, Noble Energy’s President and Chief Operating Officer, Mr. Nebenzhal, the Chief Financial Officer of Company A and the head of business development of Company A met for a previously-scheduled dinner. Although Company A had earlier indicated that it was not prepared to discuss a combination with Noble Energy, the parties discussed the various benefits and opportunities created by business scale, including potential benefits of a corporate level combination of Noble Energy and Company A in the future.

On March 4, 2020, Noble Energy and Chevron executed a mutual confidentiality agreement to permit the parties to engage in discussions about each other’s Mediterranean assets.

 

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Beginning in early March, the Kingdom of Saudi Arabia, in response to Russia’s refusal to reduce oil production, initiated a price war that led to a collapse in oil prices. At approximately the same time, the COVID-19 pandemic began to alter all aspects of life throughout the world, including in the United States, Israel and the other areas in which Noble Energy has operations. The combination of these events had an unprecedented negative effect on the energy industry. By March 18, 2020, Noble Energy’s closing stock price had declined almost 88% from year-end 2019, to $3.02 per share.

On March 12, 2020, in response to the downturn and commodity market uncertainty, Noble Energy announced a reduction in planned capital expenditures to between $1.1 and $1.3 billion for 2020, a decrease of approximately $500 million.

Beginning on March 13, 2020, the Noble Energy Board began a series of periodic special meetings to actively monitor the status of Noble Energy’s performance, financial position, liquidity, leverage forecasts and leverage position versus peers, opportunities and possible impacts of a decreased credit rating, such as higher cost of debt funding, a potential material reduction in available revolving credit facility upon renewal, potential dependence on the high yield bond market, with periods of limited to no access during downturns, reduced ability to fund future capital budgets and multi-year, major project developments, and the resulting challenges to Noble Energy’s offshore business model.

On March 20, 2020, the Noble Energy Board held another special meeting in light of the COVID-19 pandemic, continued market volatility and liquidity concerns. In response to these concerns, the Noble Energy Board recommended and authorized that management make a sizeable draw under Noble Energy’s revolving credit agreement. Thereafter, Noble Energy drew 25%, or $1 billion, of its $4 billion revolving credit agreement.

Also on March 20, 2020, Moody’s Investors Service, Inc. (“Moody’s”) placed the ratings of Noble Energy indebtedness on review for downgrade due to weakness in oil and natural gas prices. Moody’s also expressed concern that Noble Energy would not generate credit metrics supportive of its investment grade credit rating, even with the announced reduction in capital spending for 2020 and the expectation of increased natural gas sales volumes in Noble Energy’s Eastern Mediterranean operations.

On March 23, 2020, Mr. Nebenzhal, together with Keith Elliott, Noble Energy’s Senior Vice President of Offshore, and John Lewis, Noble Energy’s Senior Vice President of Corporate Development, held a video conference meeting with Mr. Mount and other Chevron exploration representatives to share information about each party’s assets and operations in the Mediterranean region. The meeting concluded with a discussion of the scope of Chevron’s planned due diligence efforts.

On March 27, 2020, S&P Global Ratings (“S&P”) lowered its credit rating for Noble Energy to BBB-, with negative outlook.

On April 9, 2020, Messrs. Elliott, Lewis and Nebenzhal had a follow-up meeting with certain Chevron representatives to address outstanding questions between the parties with particular focus on regulatory and commercial matters in the Mediterranean region.

Also on April 9, 2020, Fitch Ratings reaffirmed its BBB rating of Noble Energy but revised the outlook from stable to negative.

On April 14, 2020, the Noble Energy Board reduced the company’s quarterly dividend by 83%, to $0.02 per share, payable on May 26, 2020, to holders of record as of May 11, 2020.

On April 15, 2020, Noble Energy announced a number of actions taken in response to the significant decline in oil and gas demand and commodity prices, including, in addition to the $1 billion draw on its revolving credit facility and reduction to the dividend, (i) making a further $350 million reduction of planned capital expenditures

 

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for 2020, (ii) identifying $125 million in cash cost savings (from categories including lease operating, production taxes, gathering and transportation, general and administrative, and asset retirement), (iii) taking voluntary reductions of senior leadership salaries by 10-20 percent and decreasing the cash retainer to directors by 25 percent through year-end 2020, (iv) implementing employee furlough and part-time programs to align Noble Energy’s workforce with near-term activity levels, (v) cash-settling certain 2020 crude oil hedges that had reached maximum value, generating an additional $145 million (later updated to $160 million) in realized gains in the first quarter, and (vi) adding new downside oil hedge protection through the remainder of 2020.

On April 17, 2020, Mr. Mount and Mr. Nebenzhal had a follow-up call to discuss the diligence process status. On that call Mr. Mount indicated that Chevron was potentially interested in creating a regional partnership with Noble Energy in the Eastern Mediterranean, and such partnership would need to be at least 50% owned by Chevron. Mr. Mount indicated that Chevron preferred a higher ownership percentage or a full acquisition. Mr. Mount also indicated Chevron would need more time to provide value indications. Mr. Mount asked Mr. Nebenzhal to explore the possibility for such partnership with Noble Energy management and respond with Noble Energy’s preferred structure and residual ownership before discussing valuation.

Following this meeting, Noble Energy management engaged in a financial review of a sale of an interest in Noble Energy’s Eastern Mediterranean operations.

On April 27 and 28, 2020, the Noble Energy Board held a regularly scheduled meeting via videoconference, together with members of Noble Energy management. As part of this meeting, the Noble Energy Board discussed, among other things, management’s analysis of a sale of an interest in Noble Energy’s Eastern Mediterranean position, including a sale of between 50-100% consistent with Chevron’s expression of interest. At the conclusion of two days of meetings, the Noble Energy Board concluded that a sale of 50-100% of the Eastern Mediterranean operations would not be in the best interest of Noble Energy and its stockholders for a number of reasons, including the loss of cash flow and reduced future growth prospects. The Noble Energy Board also determined that, in light of factors such as the company’s market performance, scale and leverage, the impact of the COVID-19 pandemic and Saudi/Russia price war on the industry as a whole, commodity price uncertainty, and the considerations discussed by the Noble Energy Board in July 2019 and January 2020, Noble Energy should be proactive in identifying and considering strategically impactful transactions, particularly transactions that would accelerate the de-levering of Noble Energy’s balance sheet, diversify the asset portfolio, improve the ability of the company to return capital to stockholders, reduce concentration risk and/or meaningfully increase the scale of the company. The Noble Energy Board identified an informal, three-director advisory team consisting of the Noble Energy Board’s Lead Independent Director, Scott D. Urban, and two other independent directors, Jeffrey L. Berenson and James E. Craddock (the “Advisory Group”), to collaborate with management to proactively identify and review various strategic alternatives that might be available to the company.

On May 1, 2020, the Advisory Group met with members of Noble Energy management to begin planning its process to evaluate potential strategic alternatives. As part of this discussion, the Advisory Group and Noble Energy management identified a number of potential external advisors and, after discussion, agreed that J.P. Morgan, which had addressed the Noble Energy Board and Noble Energy management on industry trends and mergers and acquisitions activity on several occasions over the prior months, should be engaged to assist and advise the company on the evaluation of strategic alternatives. J.P. Morgan was selected based on its industry experience and performance, as well as its long-standing relationship with, and knowledge of, Noble Energy. Following the Advisory Group meeting, Mr. Stover contacted a representative of J.P. Morgan to assist Noble Energy management and the Advisory Group in identifying and exploring strategic alternatives.

On May 8, 2020, Noble Energy announced its earnings for the first quarter of 2020. Due in large measure to the significant decrease in commodity prices Noble Energy reported a $4 billion net loss and recorded certain asset impairments to its U.S. onshore properties of $4.2 billion plus an additional $900 million charge for tax valuation allowance.

 

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On May 12, 2020, Mr. Smolik met Jay R. Pryor, Chevron’s Vice President, Business Development, for dinner at which Mr. Smolik advised Mr. Pryor that Noble Energy was not interested in selling 50% or more of its Eastern Mediterranean assets but would be willing to entertain a serious offer to acquire the company. Mr. Pryor agreed to consider this and respond if Chevron was interested.

On May 13, 2020, Messrs. Stover and Smolik had a videoconference meeting with the Advisory Group and J.P. Morgan to provide an update on Mr. Smolik’s dinner with Mr. Pryor, and to consider additional potential counterparties who might be interested in a strategically-meaningful transaction, such as an acquisition by Noble Energy, a merger-of-equals, or an acquisition of Noble Energy. Noble Energy management and the Advisory Group, with the assistance of J.P. Morgan, considered a number of potential counterparties that might be candidates to acquire or combine with Noble Energy, and, based on factors including potential asset synergies, ability to transact, potential attractiveness to Noble Energy stockholders and confidentiality considerations, determined that seven potential counterparties should be contacted, in addition to Chevron, Company B and Company A. Following discussion, the Advisory Group authorized Noble Energy management and J.P. Morgan to contact the select group of counterparties to test what options might create long-term value.

On May 14, 2020, J.P. Morgan, on behalf of Noble Energy, contacted the Chief Executive Officer of Company C, a large, global independent energy company, to gauge whether Company C would be interested in acquiring Noble Energy. While Company C stated that the opportunity was interesting, it would not likely be interested at the current time because it was focused on executing its organic strategy. Moreover, Company C expressed that it would not be interested in participating in a broad process. Company C did commit to respond definitively to J.P. Morgan within a few days.

Also on May 14, 2020, the Noble Energy Board held a special meeting via videoconference, joined by members of Noble Energy management, to discuss, among other things, the status of Noble Energy’s performance, financial position, liquidity, and credit rating. Members of management and the Advisory Group also apprised the other directors of the contacts with Chevron and Company C. Following this discussion, the Noble Energy Board authorized and encouraged Noble Energy management, in consultation with the Advisory Group, to continue its discussions with the list of identified potential counterparties.

On May 15, 2020, Mr. Stover contacted the Chief Executive Officer of Company D, a large, global energy company, to inquire as to Company D’s interest in acquiring Noble Energy. Mr. Stover outlined the merits of such a transaction for both parties’ stockholders. Company D’s Chief Executive Officer agreed that industry consolidation was required and advised that Company D was evaluating a number of different transactions, all at no premium or low premium. He expressed concern about the regulatory and political environment in Colorado and advised that understanding Noble Energy’s position in Colorado and its Eastern Mediterranean assets would be key considerations, and that any deal would have to be done at a low-to-no-premium. He committed to discuss Noble Energy internally with his management team and to respond after the Memorial Day holiday.

Also on May 15, 2020, a director of Company E, an independent, domestic energy company of a smaller scale relative to Noble Energy, and Mr. Stover discussed the potential for a strategic transaction in which Noble Energy would acquire Company E given the complementary nature of each company’s onshore U.S. assets. Mr. Stover and the director of Company E agreed to discuss the potential transaction in the coming weeks.

Also on May 15, 2020, J.P. Morgan called representatives of Company F, a global energy company, to inquire as to whether Company F would be interested in acquiring Noble Energy. The Company F representatives promised to consider it and respond to J.P. Morgan quickly. Two days later, a representative of Company F contacted J.P. Morgan and advised that, while it might have an interest in the Eastern Mediterranean assets, it was not willing to consider acquiring Noble Energy.

On May 18, 2020, Moody’s affirmed Noble Energy’s Baa3 rating with a negative outlook.

 

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On May 19, 2020, J.P. Morgan had a follow-up discussion with representatives of Company C, who reiterated that Company C was focused on executing its organic strategy and would not pursue acquiring Noble Energy.

On May 20, 2020, Mr. Stover contacted the Chief Executive Officer of Company G, a large, global energy company, and advised that Noble Energy was looking at strategic alternatives and wanted to inquire as to Company G’s interest in acquiring Noble Energy, given Company G’s complementary assets and financial capabilities. The Company G Chief Executive Officer agreed to discuss internally and respond shortly.

Also on May 20, 2020, Mr. Stover had a telephone call with the Chief Executive Officer of Company H, an independent energy company, in which the parties discussed industry conditions in the wake of several restructurings, continued commodity risk, and the criticality of creating scale through consolidation. Mr. Stover advised that Noble Energy management had identified Company H as a potential strategic business combination candidate, given the complementary nature of Company H’s assets relative to Noble Energy’s assets. Company H generally agreed on the need for consolidation, but expressed concern that achieving appropriate scale might take more than one merger. Company H’s Chief Executive Officer relayed that the Company H board had its own strategic session planned for late June and that he would reconnect with Mr. Stover after that discussion.

On May 22, 2020, Mr. Smolik had a follow-up discussion with the Chief Executive Officer of Company E to discuss the strategic benefits of Noble Energy acquiring Company E, including the complementary assets and increased scale. The Company E Chief Executive Officer noted that Company E had an upcoming board meeting and committed to reconnect with Mr. Smolik thereafter.

Also on May 22, 2020, Mr. Smolik had a telephone call with the Chief Executive Officer of Company I, an international energy company, to ascertain whether Company I might have an interest in exploring an acquisition of Noble Energy. Company I agreed on the criticality of business scale and the need for industry consolidation, relayed that Company I was interested in enhancing its international operations and promised to take the opportunity under advisement. Company I’s Chief Executive Officer also advised that Company I would only consider any such transaction at low-to-no-premium to Noble Energy’s trading price.

Also on May 22, 2020, Rachel G. Clingman, Noble Energy’s Senior Vice President and General Counsel, contacted representatives of Vinson & Elkins L.L.P. (“Vinson & Elkins”) to assist Noble Energy as outside legal counsel in the review of strategic alternatives.

On May 27, 2020, Messrs. Stover and Smolik had a telephone conference with the Advisory Group and J.P. Morgan to brief the Advisory Group on discussions with other potential counterparties and to discuss a call with Chevron planned for the following day. Mr. Stover briefed the Advisory Group on the two discussions with Company E and discussed the likelihood that, if Noble Energy pursued that acquisition, Company E would require some control premium.

On May 28, 2020, the Noble Energy Board held a special meeting via videoconference, joined by members of Noble Energy management. Members of management and the Advisory Group apprised the other directors of the status of contacts with various counterparties. The Noble Energy Board and management also held further discussions on matters including Noble Energy’s performance and financial position.

Also on May 28, 2020, Mr. Smolik had a telephone conversation with Mr. Pryor, who conveyed that Chevron was interested in acquiring Noble Energy. Mr. Pryor advised that he had the full support of the Chevron senior executive team to explore acquiring Noble Energy but, in the current environment, Chevron would not be in a position to pay a premium to Noble Energy’s trading price. Mr. Pryor advised that Chevron was prepared to move quickly and was sensitive to the risk of a leak to the public about Chevron’s interest in Noble Energy. Mr. Smolik responded that Noble Energy was focused upon intrinsic and overall value, especially given its portfolio of long-term, high quality and large scale assets, and therefore that an all-stock transaction where Noble

 

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Energy stockholders retained an ongoing ownership position was important to the Noble Energy Board. The parties agreed that it would be appropriate to discuss a specific exchange ratio at a later time, after Chevron had an ability to conduct a due diligence review of Noble Energy.

On May 29, 2020, Messrs. Stover and Smolik had a telephone conference with the Advisory Group and J.P. Morgan to summarize the prior day’s phone call with Chevron. The Advisory Group encouraged Messrs. Stover and Smolik to continue to engage with Chevron and to also follow up with the other potential counterparties who had not given a final response to discussions with Noble Energy.

On June 2, 2020, Mr. Stover had a follow-up call with the Chief Executive Officer of Company D, who advised Mr. Stover that Company D was continuing to evaluate low-to-no premium transactions with other counterparties and that, while Noble Energy was of interest, Company D preferred to conclude such evaluations before entertaining a transaction with Noble Energy. Company D requested a call if Noble Energy decided to proceed with another alternative, but reminded Mr. Stover that it would only be interested in a no-premium or at most low-premium transaction.

Also on June 2, 2020, Messrs. Stover and Smolik met with Mr. Pryor for follow-up discussions on the merits of a potential transaction. Mr. Pryor again reiterated that Chevron was focused on Noble Energy, had the desire and ability to move quickly, and continued to be opposed to any premium on current stock prices. Messrs. Stover and Smolik reiterated their view that the exchange ratio should reflect Noble Energy’s intrinsic value, and agreed that discussions of appropriate exchange ratios should be held following Chevron’s due diligence review.

On June 8, 2020, Mr. Smolik had a follow-up discussion with the Chief Executive Officer of Company I, who advised Mr. Smolik that Company I analyzed the opportunity in great detail and was not interested at this time mainly because of Noble Energy’s high absolute debt level and relative over-leverage, as well as Company I’s view of opportunities within its own onshore assets. The Chief Executive Officer of Company I also advised that in international opportunities, Company I was focused on organic growth over acquisitions.

Also on June 8, 2020, Mr. Stover contacted the Chief Executive Officer of Company A, to inquire if Company A was willing to re-engage to discuss a combination with Noble Energy. The Chief Executive Officer of Company A reiterated its position that Company A had decided to remain focused on its domestic operations and was not seeking to expand into international operations at this time.

On June 9, 2020, Mr. Stover had a follow-up discussion with an executive officer of Company G, who advised Mr. Stover that Company G did a thorough review of Noble Energy but found no strategic fit with Noble Energy’s Eastern Mediterranean position and, therefore, would conclude discussions with Noble Energy.

Also on June 9, 2020, Messrs. Stover and Smolik had a videoconference meeting with the Advisory Group and J.P. Morgan to discuss recent conversations with potential counterparties. Following this discussion, the Advisory Group and Noble Energy management requested that J.P. Morgan contact Company J, an international independent energy company, to assess whether Company J might be interested in a business combination with Noble Energy.

On June 10, 2020, as requested, J.P. Morgan contacted representatives of Company J. Company J advised that integrating Noble Energy’s Eastern Mediterranean assets would be a challenge to its existing portfolio and that it was not a good time for them to consider a transaction. Company J expressed reservations about the combined leverage of the two companies.

On June 11, 2020, the Noble Energy Board met via videoconference, together with members of Noble Energy management and representatives of Vinson & Elkins. A representative of Vinson & Elkins discussed legal matters with the Noble Energy Board, including the fiduciary duties of directors in the context of

 

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considering strategic alternatives. Upon completion of Vinson & Elkins’ presentation, representatives of J.P. Morgan joined the meeting to discuss, together with Noble Energy management, topics including an exploration and production market update, the relative performance of oil and gas companies of different sizes and credit ratings, considerations related to identified strategic alternatives (including potential acquisitions, mergers, sale transactions, and remaining standalone), considerations regarding potential counterparties and considerations specific to Chevron and to Noble Energy. The Noble Energy Board also discussed the potential for a transaction with Company E, observing that while an acquisition of Company E could improve cash flows and marginally reduce leverage, it would increase Noble Energy’s portfolio risk, would likely require Noble Energy to pay a control premium and was a smaller magnitude transaction that would be more appealing after a more strategic combination. Following discussion, the Noble Energy Board determined that it would be in the best interests of Noble Energy’s stockholders for Noble Energy to further explore a transaction with Chevron, and accordingly authorized and instructed management and the advisors to enter into a non-disclosure agreement and commence initial due diligence in order to better understand the merits and opportunities of a Chevron transaction. The Noble Energy Board further authorized and instructed Noble Energy management and the Advisory Group to continue to engage with other identified counterparties, including Company H and Company D.

On June 15, 2020, Chevron sent a draft mutual confidentiality agreement to Noble Energy to facilitate further discussions about a possible transaction. Over the course of the next several days, representatives of Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul Weiss”), Chevron’s outside counsel, and representatives of Vinson & Elkins, negotiated the terms of the confidentiality agreement between Chevron and Noble Energy, including the terms of a customary standstill provision binding on Chevron. The confidentiality agreement also contained a “fall away” provision rendering the standstill inapplicable following Noble Energy’s entry into a definitive agreement to effectuate a merger, business combination or certain other type of transaction involving all or a majority of the voting securities of Noble Energy or the consolidated assets of Noble Energy, or in the event that a third party commences (or announces an intention to commence) a tender or exchange offer for all or a majority of Noble Energy’s outstanding voting securities and Noble Energy or the Noble Energy Board either recommends or accepts such offer or fails to recommend that its stockholders reject such offer within ten business days from the date of such commencement or announcement.

On June 17, 2020, Mr. Smolik had a telephone conversation with the Chief Executive Officer of Company B, and was informed that, while Company B was intrigued by Noble Energy’s Eastern Mediterranean assets and potential cash flow generation, it would not consider a business combination with Noble Energy due to Noble Energy’s debt and leverage.

On June 20, 2020, Noble Energy and Chevron executed the mutual confidentiality agreement.

On June 22, 2020, Mr. Stover had a follow-up call with the Chief Executive Officer of Company D, who advised that Company D continued to remain focused on other strategic opportunities and was not prepared to turn its attention to Noble Energy, and reiterated its view that Company D would, in any event, pursue only a combination at low-to-no-premium.

On June 25, 2020, Mr. Stover had a meeting with the Chief Executive Officer of Company H, who advised that Company H would need additional information and certainty about Noble Energy’s Eastern Mediterranean position, that more than one transaction may be required to reach necessary scale, and that the combined company’s balance sheet would still be a concern.

Throughout the course of June 26 and 27, 2020, Noble Energy management presented to Messrs. Pryor and Mount as well as other Chevron representatives, including representatives from Paul Weiss and Credit Suisse Securities (USA) LLC (“Credit Suisse”), financial advisor to Chevron, with representatives from Vinson & Elkins and J.P. Morgan also in attendance, on a series of topics related to Noble Energy’s operations, both in person and by video conference.

On June 29, 2020, Noble Energy provided Chevron with access to an electronic data-room.

 

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On July 1, 2020, the Chief Executive Officer and a director of Company E contacted Messrs. Stover and Smolik to advise that Company E had finished its board review and remained interested in the scale that a transaction between Company E and Noble Energy would provide. Mr. Stover responded that Noble Energy remained interested but had other cost reduction initiatives underway. Company E agreed they would check back with Mr. Stover in August after each company’s respective earnings call.

Also on July 1, 2020, Messrs. Stover and Smolik had a videoconference meeting with the Advisory Group and J.P. Morgan to provide the Advisory Group with an update on discussions with Chevron and the other potential counterparties as well as preparation for the upcoming Noble Energy Board meeting scheduled for July 8, 2020.

Also on July 1, 2020, Mr. Smolik had a call with Mr. Pryor to discuss Chevron’s progress and to discuss follow-up due diligence. In the course of this call, Mr. Pryor advised Mr. Smolik that Chevron’s senior executive team had met the previous day and authorized Mr. Pryor to continue to progress discussions with Noble Energy.

Between July 2 and July 6, 2020, Mr. Stover had individual telephone conversations with each of the other members of the Noble Energy Board to solicit their input on whether the time was appropriate to entertain any of the strategic alternatives, in particular the potential transaction with Chevron, as opposed to continuing to execute on the company’s existing strategy on a standalone basis.

Messrs. Smolik and Pryor had another process discussion on July 6, 2020. Mr. Smolik reiterated Noble Energy’s position that any offer should reflect the intrinsic value of Noble Energy.

On July 8, 2020, the Noble Energy Board had a special videoconference meeting, with representatives of Noble Energy management, J.P. Morgan and Vinson & Elkins in attendance. Noble Energy management and J.P. Morgan provided the Noble Energy Board with a status update on the discussions with various potential counterparties as part of the review of strategic alternatives. In total, Noble Energy management or J.P. Morgan had discussed (i) a sale of Noble Energy with six potential acquirers, (ii) a strategic business combination with four potential counterparties and (iii) an acquisition of a smaller peer company. In addition, a number of other potential acquirers or counterparties were evaluated. J.P. Morgan also provided an update on various matters, including the state of the exploration and production industry. Noble Energy management and J.P. Morgan also discussed management’s range of financial forecasts, including the assumptions underlying such forecasts, including three sets of commodity price assumptions and two sets of activity level assumptions, and addressed the directors’ numerous questions regarding these assumptions. Management’s commodity price cases included (i) the “Base” case, with long term price assumptions of $50 / $55 per barrel (WTI / Brent) and $2.50 per mmbtu (Henry hub), (ii) the “Strip+” case which reflected the then current NYMEX strip pricing through 2024E with gradual escalation to $50 / $55 per barrel (WTI / Brent) and $2.50 per mmbtu (Henry hub) by 2029, and (iii) the “Upside” case, which assumed $60 / $65 per barrel (WTI / Brent) and $2.50 per mmbtu (Henry hub) pricing starting in 2022 through 2029. Please see “—Noble Energy Unaudited Prospective Financial Information” beginning on page [    ] for additional information about these forecasts. The Noble Energy Board, management and J.P. Morgan discussed the relative likelihood of each set of commodity price assumptions and the appropriate probability weighting for each. The Noble Energy Board observed that with respect to the higher activity cases, Noble Energy would be limited by the company’s ability to finance the higher activity required to increase cash flows and lower leverage, and to manage through a cycle of low LNG prices. J.P. Morgan also analyzed the ability of Noble Energy’s unconventional businesses in the DJ Basin and Delaware Basin to generate future free cash flow, the estimated number of remaining drilling locations and the breakeven required oil price over time. Within 5-10 years, the remaining inventory would require higher oil prices to generate adequate returns.

The Noble Energy Board, management and J.P. Morgan further discussed the ability of Noble Energy to de-lever to 1.5x debt / EBITDAX, which was Noble Energy’s pre-downturn target leverage metric and the level at which Noble Energy believed it could begin increasing stockholder dividends. J.P. Morgan’s analysis showed that none of the management commodity price projection cases that management and the Noble Energy Board

 

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asked J.P. Morgan to review (including the Upside case) would enable Noble Energy to reduce its leverage below 1.7x EBITDAX and increase cash returned to stockholders through dividends or share repurchases within the next five years. In both the Base and Strip+ cases, Noble Energy’s net debt would remain above 2.9x EBITDAX through 2024. In light of this, the Noble Energy Board, management and J.P. Morgan discussed issues including the ability to return capital to stockholders, the credit rating, the potential for increased cost of debt, the degree of portfolio concentration risk associated with the Eastern Mediterranean and Colorado, the long-term viability of the existing development model, and the risk that transaction opportunities actionable at this time may not be actionable in the future.

J.P. Morgan provided and discussed with the Noble Energy Board a comparison of strategic alternatives, including remaining independent, a sale of the Eastern Mediterranean operations, a take-private of Noble Midstream, an acquisition of Company E, a combination of the prior three options, and a sale to Chevron, together with various financial comparatives of each (assuming, for hypothetical purposes only, no premium in each of an acquisition of Company E or a sale to Chevron). The Noble Energy Board observed that a potential transaction with Chevron (even at a hypothetical no premium) would reduce leverage and provide the greatest ability to increase dividends for the Noble Energy stockholders, as compared to Noble Energy’s standalone strategy and other alternatives. A sale of the Eastern Mediterranean operations would not meaningfully improve overall leverage metrics and would reduce future free cash flows. The take-private of Noble Midstream would have little effect on leverage and cash flows. An acquisition of Company E would modestly improve operating cash flow and free cash flow, but have no impact on dividend coverage and bring only a modest reduction in leverage, while increasing Noble Energy’s portfolio risk. The combination of all other alternatives had a high degree of execution risk and did not result in any material benefit on most metrics except for a modest reduction in leverage. Based on this review, the Noble Energy Board instructed Noble Energy management to continue to pursue a transaction with Chevron.

On July 9, 2020, Noble Energy issued a press release providing an operational and cost reduction update for the second quarter of 2020.

Also on July 9, 2020, Mr. Smolik had another call with Mr. Pryor who advised that Chevron intended to extend an offer. Mr. Smolik noted to Mr. Pryor that it would be important to the Noble Energy Board that an offer demonstrate the clear support of the Chevron Board of Directors.

Later that evening, Mr. Wirth called Mr. Stover to advise that Mr. Wirth would be providing an offer letter with the support of the Chevron Board. Mr. Wirth also advised that Mr. Pryor had his full authority to negotiate on behalf of Chevron.

On the morning of July 10, 2020, Mr. Pryor and Mr. Stover met in person to discuss Chevron’s proposal. Mr. Pryor explained that Chevron was highly impressed with Noble Energy’s assets and the cultural fit between the two organizations. However, Chevron would not agree to pay more than a modest premium in the current environment. Therefore, Chevron offered an exchange ratio of 0.1123 of a share of Chevron in exchange for each Noble Energy share, which was a 7.5% premium to Noble Energy’s closing price on the prior day. The 0.1123 ratio also represented a 2% premium to the ten day average closing price, a 1% premium to the three month average closing price and a nearly 11% premium to the average closing price for the period from March 6, 2020 (used by the Noble Energy Board as the beginning of the post-COVID 19 and OPEC price war period) through July 9, 2020. Chevron’s proposal emphasized the upside potential to Noble Energy stockholders from receiving Chevron’s stock and Chevron’s approximately 6% dividend yield. The proposal stressed that Chevron’s first financial priority is maintaining and growing the Chevron dividend and noted Chevron’s 33-year history of increasing dividends. It also implied a transaction-value-to-2021-estimated-EBITDAX of 6.8x based on management’s Base case forecast.

Also on July 10, 2020, Chevron sent a draft merger agreement to Noble Energy. Among other things, the draft included provisions that required Noble Energy to present the Chevron transaction to Noble Energy’s

 

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stockholders for approval even if a third party were to propose an alternative transaction that the Noble Energy Board determined to be a superior proposal (a “Force the Vote Provision”). The Chevron draft merger agreement also included a termination fee payable by Noble Energy in certain circumstances, including one in which the Noble Energy Board withdrew its recommendation in favor of the Chevron transaction in response to a superior proposal from a third party, equal to 4% of Noble Energy’s equity value implied by the transaction.

That afternoon, Messrs. Stover and Smolik had a videoconference meeting with the Advisory Group and J.P. Morgan to discuss a response to Chevron and to prepare for an upcoming Noble Energy Board meeting scheduled for July 13, 2020.

On July 13, 2020, the Noble Energy Board had a special videoconference meeting, with representatives of Noble Energy management, J.P. Morgan and Vinson & Elkins in attendance. Mr. Stover reviewed Chevron’s offer and his discussions with Mr. Pryor. Representatives of J.P. Morgan provided the Noble Energy Board with J.P. Morgan’s analyses regarding certain financial aspects of the proposal, including comparisons to various alternative exchange ratios.

The Noble Energy Board, Noble Energy management and the advisors engaged in a discussion of the specific risks and considerations relating to remaining a standalone entity. The Noble Energy Board discussed Noble Energy’s credit rating, including collateral posting requirements, ability to execute major offshore projects, the possibility and impact of relying on project-based secured financing on Noble Energy’s operations, the sustainability and financeability of an exploration and expansion program at elevated levels of leverage, the ability to reduce leverage, and the likelihood of lower liquidity driven by a significantly smaller revolving credit facility upon renewal. The Noble Energy Board, Noble Energy management and the advisors also discussed portfolio concentration risk and geopolitical instability across the Eastern Mediterranean region and Colorado, the ability to return capital to stockholders, the likelihood of a “lower for longer” price environment for oil and LNG, and the potentially asymmetric risk of timing for any potential recovery and the share price volatility of Noble Energy compared to major, integrated companies.

The Noble Energy Board also discussed with management and J.P. Morgan a comparison of Chevron and Noble Energy’s 2020 capital expenditure budget changes, the ability of both companies to continue funding exploration, and the impact of potential unsuccessful exploration, lower volumes from the Eastern Mediterranean, and/or a delay in funding expansion in Equatorial Guinea and Eastern Mediterranean on Noble Energy management’s forecasts. The Noble Energy Board observed that this analysis revealed that only very high levels of assumed success would position Noble Energy to reduce debt in the outer years of the company’s ten year plan.

The Noble Energy Board also discussed with management and J.P. Morgan the ability of Chevron to maintain its dividend, the impact of recent market conditions on Chevron and the potential impact of an acquisition of Noble Energy on Chevron. The Noble Energy Board observed that this analysis showed that Chevron had significant financial flexibility to continue both development and its current dividend payments, notwithstanding another two years of low commodity prices. In contrast, Noble Energy’s stand-alone analysis reflected financial stress should commodity prices fail to materially recover during this same timeframe. The Noble Energy Board also discussed transaction multiples and premiums from recent transactions.

The Noble Energy Board then discussed with Noble Energy management and the advisors a strategy to respond to Chevron. The Noble Energy Board considered a number of response options and ultimately unanimously agreed that the best path for stockholder value was to reject Chevron’s proposed exchange ratio but to indicate the Noble Energy Board’s continuing interest and to demonstrate to Chevron that intrinsic value supported a higher exchange ratio. Thereafter, J.P. Morgan representatives left the meeting and a representative of Vinson & Elkins summarized for the Noble Energy Board the key terms of Chevron’s proposed merger agreement, including the proposed Force the Vote Provision and the termination fee. The Noble Energy Board strongly rejected the Force the Vote Provision, particularly in light of Chevron’s position on its willingness to pay a premium.

 

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Also on July 13, 2020, Mr. Stover met in person with Mr. Pryor to advise that the Noble Energy Board was unwilling to accept Chevron’s proposal from a perspective of value and because the proposed premium failed to take into account any pre-COVID-19 performance. Mr. Stover advised Mr. Pryor that Noble Energy believed an exchange ratio that considered both the one-year average exchange ratio (0.1525) and the year-to-date average exchange ratio (0.1251) would be more appropriate. Mr. Pryor agreed to take Noble Energy’s position back to Chevron management, but also advised that he did not think that Chevron would be willing to transact at these exchange ratios.

On July 14, 2020, Mr. Pryor met in person with Mr. Stover and explained that, while Chevron remained very interested in the transaction, Chevron remained focused on its view of value and would not be able to agree to more than a single-digit, day-one implied premium. Mr. Pryor suggested that the parties and their advisors attempt to negotiate the merger agreement terms and revisit the exchange ratio at the end of the week.

On July 15, 2020, the Noble Energy Board had a special videoconference meeting, with representatives of Noble Energy management, J.P. Morgan and Vinson & Elkins in attendance. Mr. Stover updated the Noble Energy Board on the status of discussions with Chevron. Representatives of J.P. Morgan reviewed preliminary financial analyses of the proposed transaction and the Noble Energy Board (i) discussed matters including the impact on stock prices of prior dividend cuts by international oil companies, (ii) further reviewed the ability of Chevron to maintain its dividend, (iii) discussed potential strategic alternatives again, including an alternative where Noble Energy would acquire Noble Midstream and Company E, and would not sell its Eastern Mediterranean assets. Following this presentation, the representatives of J.P. Morgan left the meeting, and the directors engaged in a discussion with Noble Energy management and Vinson & Elkins on negotiating strategy. After discussion, the Noble Energy Board determined that it would be helpful to see how Noble Energy’s stock traded relative to Chevron’s stock for the remainder of the week, and the Noble Energy Board instructed Noble Energy’s management and advisors to negotiate the merger agreement with Chevron and its advisors and revisit the exchange ratio at the end of the week.

On July 16, 2020, Noble Energy sent Chevron a revised draft merger agreement that, among other revisions, eliminated the Force the Vote Provisions and proposed a termination fee of 2.5% of Noble Energy’s equity value implied by the transaction.

Also on July 16, 2020, representatives of J.P. Morgan and Credit Suisse had a telephone conference to discuss the due diligence topics that Noble Energy and its representatives proposed to ask Chevron, which topics had been previously provided to Chevron. During the course of this discussion, the J.P. Morgan representatives emphasized to the Credit Suisse representatives that the Noble Energy Board would not agree to a Force the Vote Provision.

On July 17, 2020, Paul Weiss sent Vinson & Elkins a revised draft merger agreement which, among other things, reinstated the Force the Vote Provision and proposed that Noble Energy’s termination fee would be equal to 3.75% of its equity value implied by the transaction. Later that day, representatives of Vinson & Elkins and Ms. Clingman had a discussion with representatives of Paul Weiss regarding the terms of the merger agreement, including the scope of representations and warranties and interim operating covenants.

Following the close of the market, Messrs. Stover and Smolik met in person with Mr. Pryor and Mr. Mount. Mr. Pryor proposed that Chevron would concede the Force the Vote Provision and agree to a 3.25% termination fee, and proposed an exchange ratio of 0.1180 of a share of Chevron in exchange for each Noble Energy share, which was a 5.1% increase in the exchange ratio from Chevron’s prior offer and a 6.6% premium to Noble Energy’s closing price on July 17th. The 0.1180 ratio also represented a nearly 11% premium to the ten day average closing price, a nearly 10% premium to the three month average closing price and a nearly 22% premium to the average closing price for the period from March 6, 2020 through July 17, 2020. The offer also

 

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implied a transaction-value-to-2021-estimated-EBITDAX multiple of 7.3x based on management’s Base case forecast.

On the morning of July 18, 2020, the Noble Energy Board met via videoconference, together with members of Noble Energy management and representatives of Vinson & Elkins and J.P. Morgan. Representatives of J.P. Morgan provided J.P. Morgan’s preliminary financial analysis on the Chevron proposal. After much discussion among the Noble Energy Board, Noble Energy management and the advisors, the Noble Energy Board expressed support for, but not final approval of, a transaction at the proposed 0.1180 exchange ratio and instructed Mr. Stover to seek a further increase in the exchange ratio.

Mr. Stover thereafter contacted Mr. Pryor to ask him to arrange for a call with Mr. Wirth.

Mr. Stover called Mr. Wirth and advised that the parties were close to a transaction but the Noble Energy Board strongly desired an additional increase in the exchange ratio, noting that while the exchange ratio had improved, the premium had declined based upon interim relative stock price movement. Mr. Wirth confirmed that Mr. Stover had the authority from the Noble Energy Board to agree on terms, which Mr. Stover provided. After further discussion, Mr. Wirth agreed to an enhanced exchange ratio of 0.1191, in return for an increase in the proposed termination fee from 3.25% to 3.5%, which Mr. Stover accepted. The 0.1191 ratio represented a 7.6% premium to Noble Energy’s July 17, 2020 closing price, a 12% premium to the ten day average closing price, a nearly 11% premium to the three month average closing price and a nearly 23% premium to the average closing price for the period from March 6, 2020 through July 17, 2020. It also implied a transaction-value-to-2021-estimated-EBITDAX multiple of 7.3x based on management’s Base case forecast.

That afternoon, Vinson & Elkins sent Paul Weiss a revised draft of the merger agreement that, among other matters, eliminated the Force the Vote Provision and reflected a termination fee of 3.5% of Noble Energy’s equity value implied by the transaction.

Also that afternoon, Noble Energy management, assisted by J.P. Morgan, held a due diligence session concerning Chevron with Pierre R. Breber, Chevron’s Vice President and Chief Financial Officer and representatives from Credit Suisse. Mr. Breber provided an overview of Chevron’s operations and discussed Chevron’s expected results for the second quarter of 2020, including an anticipated significant charge for asset impairments and severance costs, commodity price realization pressures and low refinery utilization.

On the morning of July 19, 2020, the Noble Energy Board met via videoconference, together with members of Noble Energy management and representatives of Vinson & Elkins and J.P. Morgan. Representatives of J.P. Morgan reviewed with the Noble Energy Board their financial analyses of the proposed transaction at the agreed upon 0.1191 exchange ratio and the Noble Energy Board discussed with Noble Energy management and J.P. Morgan the standalone prospects for the company to pay down debt, return capital to stockholders and to fund expansion projects and exploration. The Noble Energy Board also discussed with J.P. Morgan a further analysis of the ability of Chevron to maintain its dividend, and the potential impact of an acquisition of Noble Energy on Chevron. The Noble Energy Board observed that this analysis showed that Chevron had financial flexibility to continue operations and its current dividend payments until at least 2022, regardless of whether commodity prices recovered. A representative of Vinson & Elkins updated the Noble Energy Board on the status of the merger agreement, including finalizing certain representations and warranties.

In the evening of July 19, 2020, the Noble Energy Board met via videoconference, together with members of Noble Energy management and representatives of Vinson & Elkins. A representative of Vinson & Elkins updated the Noble Energy Board on the key terms in the merger agreement. Following this discussion, representatives of J.P. Morgan joined the meeting. A representative of J.P. Morgan delivered its oral opinion, confirmed by delivery of a written opinion dated July 20, 2020, that, as of such date and based upon and subject to the factors and assumptions set forth in J.P. Morgan’s written opinion, the consideration to be paid to the holders of Noble Energy common stock in the proposed merger was fair, from a financial point of view, to such

 

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holders. See the section entitled “—Opinion of Noble Energy’s Financial Advisor” for more information.

After carefully considering the proposed terms of the transaction with Chevron, and taking into consideration the matters discussed during that meeting and prior meetings of the Noble Energy Board, including the factors described above and under the section entitled “—Recommendation of the Noble Energy Board and Reasons for the Merger,” the Noble Energy Board unanimously (1) declared that the merger agreement and the transactions contemplated thereby (including the merger), are fair to, and in the best interests of, Noble Energy’s stockholders, (2) approved and declared advisable the merger agreement and the transactions contemplated thereby (including the merger), (3) directed that the adoption of the merger agreement be submitted to a vote at a meeting of the Noble Energy stockholders and (4) resolved (subject to certain exceptions set forth in the merger agreement) to recommend the approval and adoption of the merger agreement and the transactions contemplated thereby (including the merger) by the Noble Energy stockholders.

Following the Noble Energy Board meeting, representatives of Vinson & Elkins and Noble Energy management worked throughout the night with representatives of Paul Weiss and Chevron management to finalize the merger agreement. In the early morning of July 20, 2020, Noble Energy and Chevron executed the merger agreement.

Prior to the opening of trading on July 20, 2020, Chevron issued a press release announcing execution of the merger agreement with Noble Energy.

Chevron’s Rationale for the Transaction

Chevron believes that the merger with Noble Energy presents Chevron with the opportunity:

 

   

to enhance its portfolio of assets both in its U.S. onshore (in the DJ Basin, Permian Basin and Eagle Ford) and international operations (in Israel and Equatorial Guinea);

 

   

to improve Chevron’s resource base through the acquisition of proved reserves and undeveloped resources at an attractive acquisition cost;

 

   

to achieve operational and other cost synergies through the rationalization of duplicate activities and utilization of Chevron’s scale; and

 

   

to be accretive to return on average capital employed, free cash flow, and earnings per share within 12 months after the completion of the merger.

Noble Energy Board’s Recommendations and Its Reasons for the Transaction

By unanimous vote, the Noble Energy Board, at a meeting held on July 19, 2020, (a) declared that the merger agreement and the transactions contemplated thereby (including the merger), are fair to, and in the best interests of, Noble Energy’s stockholders, (b) approved and declared advisable the merger agreement and the transactions contemplated thereby (including the merger), (c) directed that the adoption of the merger agreement be submitted to a vote at a meeting of the Noble Energy stockholders and (d) resolved (subject to certain exceptions set forth in the merger agreement) to recommend the approval and adoption of the merger agreement and the transactions contemplated thereby (including the merger) by the Noble Energy stockholders. The Noble Energy Board unanimously recommends that Noble Energy stockholders vote “FOR” the merger proposal and “FOR” the non-binding compensation advisory proposal.

 

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In reaching its determinations and recommendations, the Noble Energy Board consulted with company management and independent financial and legal advisors and considered a range of factors and scenarios, as discussed below. Factors that weighed in favor of the merger include:

 

   

Greater Stockholder Value and Return Potential. The Noble Energy Board assessed the value and nature of the consideration to be received in the merger by Noble Energy stockholders, including:

 

   

The stock-for-stock merger enables Noble Energy stockholders to participate in the value and opportunities of Chevron after the merger, including both dividends and expected future growth;

 

   

Chevron has historically paid an above-market stockholder dividend, has a 33-year history of increasing its dividend annually, and has a strongly-stated public commitment to protect its dividend;

 

   

Based on financial analyses conducted at the request of the Noble Energy Board, the Noble Energy Board believes that Chevron has significant financial flexibility to continue its current dividend payments, even assuming another two years of low commodity prices;

 

   

Based on the closing trading price of Chevron common stock of $87.19 on July 17, 2020, the last trading day prior to public announcement of the merger, the merger consideration represented an implied value of $10.38 per share of Noble Energy common stock;

 

   

The consideration to be paid to holders of Noble Energy common stock represented:

 

   

a 12% premium to the ten (10) day average closing price for the period ended July 17, 2020 (the last trading day prior to public announcement of the merger);

 

   

a nearly 11% premium to the three (3) month average closing price for the period ended July 17, 2020; and

 

   

a nearly 23% premium to the average closing price for the period from March 6, 2020 (which the Noble Energy Board determined was the beginning of the post-COVID-19 and OPEC price war period) through July 17, 2020;

 

   

The implied transaction-value-to-2021-estimated-EBITDAX (based on management’s Base case EBITDAX estimates) multiple of 7.3x compares favorably to recent, high premium transactions in the upstream oil & gas industry:

 

Date Announced

  

Buyer/Seller

   Transaction Value      Transaction Value /
EBITDAX(1)
 

7/20/20

   Chevron/Noble Energy    $ 13.2 billion        7.3x  

11/14/19

   Callon/Carrizo    $ 2.7 billion        3.5x  

5/9/19

   Oxy/Anadarko    $ 56.9 billion        7.2x  

11/1/18

   Encana/Newfield    $ 7.7 billion        4.2x  

 

(1)

Multiple for the Chevron / Noble Energy transaction based on Noble Energy management base forecast using 2021 estimated EBITDAX. Please see “—Noble Energy Unaudited Prospective Financial Information” beginning on page [    ] for additional information about these forecasts. For all other transactions, the multiple disclosed is based on SEC filings and consensus estimates of the subsequent twelve month EBITDAX. Using consensus estimates for 2021 EBITDAX for Noble Energy, the Chevron / Noble Energy multiple would be 6.7x.

 

   

Chevron has an industry-leading balance sheet and liquidity as of June 30, 2020 of more than $30 billion; and

 

   

The merger is structured as a stock-for-stock transaction and is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

 

   

Benefits of Chevron After the Merger: Greater Scale and Financial Strength. The Noble Energy Board believed that the company resulting from a merger of Chevron and Noble Energy would be extremely

 

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well positioned, with industry-leading market capitalization, global footprint and ability to invest on a strategic timeline less susceptible to immediate commodity prices.

 

   

The global scale of Chevron after the merger; integration across upstream, midstream and downstream assets; and geographic, asset and potential business diversity will reduce cash flow volatility and better support strategic investment;

 

   

A larger, diversified asset portfolio would de-risk the portfolio and any potential future impact from regulatory changes or initiatives in the Eastern Mediterranean or Colorado;

 

   

Chevron after the merger will have a strong investment-grade credit rating (currently Aa2 and AA), a materially lower cost of capital, and a greater ability to fund major projects and maximize returns than Noble Energy on a standalone basis;

 

   

The merger significantly improves a number of key financial metrics on a pro forma basis, including as follows:

 

Scale

   Noble
Energy
    Chevron      Pro
Forma
     Pro Forma
to Noble
Energy
Stockholders
 

Market Capitalization as of July 17, 2020 ($ billions)

      $4.69       $163.02        $167.71        $5.04  

Returns

                          

Last Twelve Months Free Cash Flow ($ per share)(1)

     ($2.36     $    2.66        $    1.99        $0.24  

Estimated 2021 Annual Dividends ($ millions)

      $   38       $  9,722        $10,024        $ 301  

Annualized Dividend ($ per share)(2)

     0.08       $    5.16        $    5.16        $0.61  

Financial Strength

                          

Net debt / LTM EBITDAX

     3.4x       1.0x        1.2x        1.2x  

Credit Rating (Moody’s / S&P)

     Baa3/BBB-       Aa2/AA        Aa2/AA        Aa2/AA  

 

(1)

Pro Forma to NBL Stockholders based on fixed exchange ratio.

(2)

Pro Forma to NBL Stockholders based on fixed exchange ratio and dividend paid for the quarter ended June 30, 2020.

 

   

The complementary nature, quality and scale of assets of Chevron after the merger, including:

 

   

Global Offshore Conventional Basins in Eastern Mediterranean and West Africa: The combination of Noble Energy’s world-class natural gas reservoirs (including significant discovered resources) in West Africa and the Eastern Mediterranean with Chevron’s exceptional global upstream conventional asset portfolio, consistent exploration program and global LNG portfolio and experience is expected to:

 

   

strengthen the asset portfolio of Chevron after the merger;

 

   

enhance returns from integrated global gas operations;

 

   

generate greater free cash flow, with a significantly reduced cost of capital;

 

   

improve the chance of exploration program success;

 

   

create a leading industry player in the Mediterranean region, an area of ongoing expansion;

 

   

provide greater ability to monetize Noble Energy’s discovered conventional gas resources; and

 

   

support further growth opportunities globally.

 

   

U.S. Onshore Unconventional DJ Basin and Permian Basin: Noble Energy brings a significant unconventional asset base in the DJ Basin (336,000 net acres) and adds 92,000

 

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largely contiguous and adjacent net acres to Chevron’s existing acreage in the Permian Basin, benefitting Noble Energy stockholders by:

 

   

enhancing a leading U.S. unconventional position;

 

   

providing cost and infrastructure efficiencies due to greater scale; and

 

   

reducing basin-specific concentration risk.

 

   

The significant synergies of the combination, which are not achievable by Noble Energy as a standalone entity, are projected to be accretive to free cash flow, earnings and book returns within one year following the consummation of the transaction, assuming a price of $40 or higher per barrel of Brent Crude Oil;

 

   

The larger enterprise will have improved ability to withstand commodity supply and demand and price volatility;

 

   

While Noble Energy and Chevron are both industry leaders on Environmental, Social and Governance (“ESG”) matters, Chevron after the merger will have greater scale and resources to respond to increasing regulatory and other ESG matters; and

 

   

Chevron and Noble Energy share core values of integrity, collaboration, accountability and caring of people and the environment, and the combined workforce will continue to increase efficiency and deliver stockholder value.

 

   

Ability to Protect Opportunity While Mitigating Downside Risk of Portfolio; Superior Alternative to Continuing Noble Energy as an Independent, Standalone Company. The Noble Energy Board determined that entering into the merger agreement with Chevron provided the best alternative to create stockholder value from the Noble Energy assets on a short-, intermediate- and long-term basis, including as compared to continued operations on a standalone basis in light of the compelling value proposition of the Chevron transaction. In reaching this conclusion, the Noble Energy Board examined three sets of commodity price assumptions, including (i) a “Base” case, with long term price assumptions of $50 / $55 per barrel (WTI / Brent) and $2.50 per mmbtu (Henry hub), (ii) a “Strip+” case which reflected the then current NYMEX strip pricing through 2024E with gradual escalation to $50 / $55 per barrel (WTI / Brent) and $2.50 per mmbtu (Henry hub) by 2029, and (iii) an “Upside” case, which assumed $60 / $65 per barrel (WTI / Brent) and $2.50 per mmbtu (Henry hub) pricing starting in 2022 through 2029. The Noble Energy Board further considered two sets of drilling activity assumptions, as described in more detail under “—Noble Energy Unaudited Prospective Financial Information” beginning on page [    ]. The Noble Energy Board also considered the following operational and financial risks inherent in maintaining the assets within the current or a somewhat larger standalone exploration and production company, and determined that the Chevron transaction eliminated, or significantly reduced, key risks:

 

   

Noble Energy’s balance sheet has a debt-to-capitalization ratio and leverage that are among the highest of its peers and its projected financial condition will likely constrain its ability to pursue large future projects both domestically and internationally;

 

   

Long-term commodity price fluctuations and regulatory risk challenge the long-term competitiveness and sustainability of future cash flows from Noble Energy’s assets in a standalone business;

 

   

Noble Energy operates in an industry that is generally out of favor among investors, which threatens Noble Energy’s long-term valuation and access to capital as a standalone entity;

 

   

Noble Energy faces the potential risk of a loss of its investment grade credit ratings, which would likely result in:

 

   

collateral requirements potentially impacting near term liquidity;

 

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a higher cost of capital;

 

   

the potential longer-term loss of liquidity from a likely significant reduction of the revolving credit facility upon renewal;

 

   

more restrictive covenants for new bond issues and bank debt; and

 

   

a disproportionate reduction of bank and capital markets capacity over time, based upon scale and ESG considerations;

 

   

Noble Energy anticipates a dividend of no more than the current $0.08 per share annually for several years, given that Noble Energy’s need to reduce leverage to historic, pre-downturn level of less than 1.5x net debt to EBITDAX would restrict additional cash beyond the current annual dividend:

 

   

through 2026 in management’s Base, Strip+, and Strip+ Low cases; and

 

   

through 2025 even in management’s Upside case, which is dependent on a WTI commodity price of $60 per barrel in 2022 and beyond;

 

   

Noble Energy’s reduced spending in 2020 reduces future free cash flow from its unconventional businesses in the DJ Basin and Delaware Basin. Although adequate inventory of future drilling opportunities exists in the near team, additional investment would be required to supplement the inventory. Within 5-10 years, the remaining inventory would require higher oil prices to generate adequate returns;

 

   

Noble Energy’s 10-year plan requires a high level of future exploration and development project success to materially increase cash flows available to its stockholders during years 5-10;

 

   

Noble Energy is susceptible to concentration risk associated with its Eastern Mediterranean and DJ Basin assets in light of ongoing regulatory and political uncertainty and volatility;

 

   

Noble Energy faces near-term commodity price risk because commodity demand has been severely impacted by the global COVID-19 pandemic; and

 

   

Noble Energy operates in an industry that faces significant potential financial and operating risks associated with environmental and other regulatory considerations, and growing pressure to diversify away from fossil fuels.

 

   

Superior Alternative to Other Transactions Potentially Available to Noble Energy. The Noble Energy Board instructed Noble Energy management to identify and test a number of alternative scenarios and potential transactions. The Noble Energy Board evaluated these alternatives on a consistent basis using management’s projections of future financial performance and advice from external advisors. As described under the section entitled “—Background of the Merger,” at the request of the Noble Energy Board, Noble Energy management and its advisors conducted a robust evaluation of strategic alternatives, including discussions with eleven potential counterparties over two months regarding various transactions that ranged from acquisitions of other companies, to mergers of equals, to a full acquisition of Noble Energy. Ultimately, the Noble Energy Board evaluated the following potential alternative transactions:

(i) the sale of all or part of its Eastern Mediterranean assets;

(ii) a take-private of its master limited partnership, Noble Midstream Partners LP;

(iii) a merger of equals with a peer company;

(iv) purchasing a smaller peer company with asset and cost synergies; and

(v) a combination of the foregoing.

After detailed consideration of the opportunities and risks of each alternative, the Noble Energy Board determined that entering into the merger agreement with Chevron provided a superior path for

 

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sustaining and enhancing stockholder value and mitigating risk, compared to pursuing an alternative transaction, in light of certain factors, including:

 

   

After the merger, Chevron would, on a pro forma basis in 2021 and 2022, have

 

   

an industry-low debt ratio;

 

   

an industry-high liquidity profile;

 

   

a significant increase in the amount, longevity and sustainability of dividends to stockholders of Chevron after the merger;

 

   

less concentration risk to unfavorable regulatory developments in Noble Energy’s jurisdictions of operations;

 

   

greater ability to invest across the energy value chain and increase value from the assets and enhance future opportunities;

 

   

the potential for incremental stockholder returns in a higher commodity price environment; and

 

   

increased scale and capacity to address growing environmental and climate considerations and potential regulatory changes.

 

   

in all alternatives, Noble Energy’s leverage would continue to be significant and would continue to restrain opportunities;

 

   

compared to most alternatives, the merger with Chevron creates greater organic future cash flows;

 

   

even in the Upside case, none of the alternatives would generate sufficient free cash flow after required debt reduction to accelerate Noble Energy’s ability to grow its dividends or generate other meaningful stockholder return opportunities until at least the end of 2023;

 

   

none of the alternatives would allow Noble Energy to fund value-accretive expansion in the Eastern Mediterranean while maintaining targeted leverage needed to grow its dividends or generate other meaningful stockholder return opportunities;

 

   

a sale of Noble Energy’s Eastern Mediterranean business would further reduce future cash flow and concentrate more of the remaining value of the company in the DJ Basin assets in Colorado;

 

   

a take-private of Noble Midstream would not materially improve cash flows or leverage;

 

   

several potential alternative transactions would exacerbate Noble Energy’s portfolio concentration risks;

 

   

Chevron indicated the greatest interest in a transaction with Noble Energy and promised the greatest value to Noble Energy stockholders driven in part by its public commitment to grow and protect stockholder dividends; and

 

   

while several alternative proposals might have resulted in limited benefits to the balance sheet of the pro forma company, a combination with Chevron offered the greatest risk-adjusted long-term value, financial flexibility and sustainability.

 

   

Opportunity to Receive Alternative Acquisition Proposals and to Terminate the Merger in Order to Accept a Superior Proposal. The Noble Energy Board considered the terms of the merger agreement related to Noble Energy’s ability to respond to unsolicited acquisition proposals and determined that the provisions of the merger agreement would not deter or preclude any third party from making a competing proposal and that the Noble Energy Board might, under certain circumstances, furnish information and enter into discussions and negotiations in connection with a competing proposal. In this regard, the Noble Energy Board considered that:

 

   

Recent precedent demonstrates that an executed merger agreement is not a deterrent to potential topping bids;

 

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subject to compliance with the applicable provisions of the merger agreement, the Noble Energy Board may, before adoption by Noble Energy stockholders, change its recommendation to Noble Energy stockholders with respect to adoption of the merger agreement if the Noble Energy Board determines in good faith, after consultation with its legal advisors, that failing to make a change in its recommendation would reasonably likely be inconsistent with the Noble Energy Board’s fiduciary duties;

 

   

subject to its compliance with the applicable provisions of the merger agreement, the Noble Energy Board may terminate the merger agreement in order to enter into a superior proposal; and

 

   

the Noble Energy Board believed that the termination fee of $176 million is reasonable in light of the circumstances and the overall terms of the merger agreement, consistent with fees in comparable transactions, and would not discourage alternative acquisition proposals from credible third parties willing and able to make such proposals. Noble Energy would be required to pay the termination fee to Chevron in certain circumstances, including if (i) Chevron terminates the merger agreement in connection with a change in the Noble Energy Board’s recommendation to its stockholders with respect to adoption of the merger agreement or (ii) Noble Energy terminates the merger agreement in order to enter into a definitive agreement with respect to a superior proposal.

 

   

Receipt of Fairness Opinion and Presentation from J.P. Morgan. The Noble Energy Board considered the financial analysis reviewed and discussed with representatives of J.P. Morgan, as well as the oral opinion of J.P. Morgan rendered to the Noble Energy Board on July 19, 2020, which opinion was subsequently confirmed by delivery of a written opinion, dated as of July 20, 2020, that, as of such date and based upon and subject to the factors and assumptions set forth in J.P. Morgan’s written opinion, the consideration to be paid to the holders of Noble Energy common stock in the proposed merger was fair, from a financial point of view, to such holders, as more fully described below under the heading “—Opinion of Noble Energy’s Financial Advisor” beginning on page [    ].

 

   

Terms of the Merger Agreement. The Noble Energy Board reviewed and considered the terms of the merger agreement, taken as a whole, including the parties’ representations, warranties and covenants, and the circumstances under which the merger agreement may be terminated, and concluded that such terms are reasonable and fair to Noble Energy. The Noble Energy Board also reviewed and considered the conditions to the completion of the merger, including regulatory approvals, which it believes are likely to be satisfied on a timely basis. The Noble Energy Board noted in particular that the completion of the merger is not subject to any financing condition or any condition based upon Chevron stockholder approval, which enhances the likelihood of the merger’s consummation.

In the course of its deliberations, the Noble Energy Board also considered a variety of risks and other potentially negative factors, including the following:

 

   

Transacting During a Downturn in the Energy Industry. The Noble Energy Board considered that the merger with Chevron would occur at a time when commodity prices and the stock prices of energy companies, including Noble Energy, are depressed.

 

   

Fixed Exchange Ratio. The Noble Energy Board considered that because the merger consideration is based on a fixed exchange ratio rather than a fixed value, Noble Energy stockholders will bear the risk of a decrease in the trading price of Chevron common stock during the pendency of the merger and the merger agreement does not provide Noble Energy with a collar or a value-based termination right.

 

   

Risks Associated with the Pendency of the Merger. The risks and contingencies relating to the announcement and pendency of the merger, including the potential for diversion of management and employee attention and the potential effect of the combination on the businesses of both companies and the restrictions on the conduct of Noble Energy’s business during the period between the execution of the merger agreement and the completion of the transactions contemplated thereby as set forth in the merger agreement.

 

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Possible Failure to Achieve Synergies. The potential challenges and difficulties in integrating the operations of Noble Energy and Chevron and the risk that anticipated cost savings and operational efficiencies between the two companies, or other anticipated benefits of the merger, might not be realized or might take longer to realize than expected.

 

   

Termination Fee. The Noble Energy Board considered that Noble Energy would be required to pay to Chevron a termination fee of $176 million in the event Noble Energy were to terminate the merger agreement in order for Noble Energy to enter into a superior proposal, should one be made, or if the merger agreement were to be terminated by Chevron in connection with a change in the Noble Energy Board’s recommendation to its stockholders with respect to adoption of the merger agreement.

 

   

Restrictions on Third-Party Discussions. The Noble Energy Board considered that the merger agreement required Noble Energy to terminate all discussions with potential alternative transaction counterparties while noting that Noble Energy would have the right to respond to alternative proposals that might be made by such parties pursuant to and in accordance with the applicable terms of the merger agreement.

 

   

Small Pro Forma Ownership. The Noble Energy Board considered that, based on the implied value of the merger consideration as of July 17, 2020, Noble Energy stockholders would only own approximately 3% of Chevron after the merger.

 

   

Risk Related to Chevron’s Dividend. Given the importance of Chevron’s dividend to the Noble Energy Board’s recommendation, the Noble Energy Board considered and tested the risk that Chevron would reduce its dividend.

 

   

Other Risks. The Noble Energy Board considered risks of the type and nature described under the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” beginning on pages [    ] and [    ], respectively.

The Noble Energy Board believed that, overall, the potential benefits of the merger to Noble Energy stockholders outweighed the potential risks and uncertainties of the merger.

In addition, the Noble Energy Board was aware of and considered that Noble Energy’s directors and executive officers may have interests in the merger that may be different from, or in addition to, their interests as stockholders of Noble Energy generally, as described below under the heading “—Interests of Directors and Executive Officers of Noble Energy in the Merger” beginning on page [    ].

The foregoing discussion of factors considered by the Noble Energy Board is not intended to be exhaustive, but it includes material factors considered by the Noble Energy Board. In light of the variety of factors considered in connection with its evaluation of the merger, the Noble Energy Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Moreover, each member of the Noble Energy Board applied his or her own personal business judgment to the process and may have given different weight to different factors. The Noble Energy Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Noble Energy Board based its recommendation on the entirety of the information presented.

Opinion of Noble Energy’s Financial Advisor

Pursuant to an engagement letter effective as of March 23, 2020, Noble Energy retained J.P. Morgan as its financial advisor in connection with the consideration of possible strategic M&A transactions, including the proposed merger. At the meeting of the Noble Energy Board on July 19, 2020, J.P. Morgan rendered its oral opinion to the Noble Energy Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the merger consideration to be paid to holders of Noble Energy common

 

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stock in the proposed merger was fair, from a financial point of view, to such holders. J.P. Morgan subsequently confirmed its oral opinion by delivering its written opinion to the Noble Energy Board, dated as of July 20, 2020, that, as of such date, the consideration to be paid to the holders of Noble Energy common stock in the proposed merger was fair, from a financial point of view, to such holders.

The full text of the written opinion of J.P. Morgan dated July 20, 2020, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Noble Energy’s shareholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Noble Energy Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the merger consideration to be paid to the holders of Noble Energy common stock in the merger and did not address any other aspect of the merger. J.P. Morgan expressed no opinion as to the fairness of the consideration to the holders of any class of securities, creditors or other constituencies of Noble Energy or as to the underlying decision by Noble Energy to engage in the proposed merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The summary of the opinion of J.P. Morgan set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. The opinion does not constitute a recommendation to any shareholder of Noble Energy as to how such shareholder should vote with respect to the proposed merger or any other matter.

In arriving at its opinion, J.P. Morgan, among other things:

 

   

reviewed the merger agreement;

 

   

reviewed certain publicly available business and financial information concerning Noble Energy and the industries in which it operates;

 

   

compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration paid for such companies;

 

   

compared the financial and operating performance of Noble Energy with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of the Noble Energy common stock and Chevron common stock and certain publicly traded securities of such other companies;

 

   

reviewed certain internal financial analyses and forecasts prepared by the management of Noble Energy relating to its business; and

 

   

performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

In addition, J.P. Morgan held discussions with certain members of the management of Noble Energy and Chevron with respect to certain aspects of the merger, and the past and current business operations of Noble Energy, the financial condition and future prospects and operations of Noble Energy, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by Noble Energy and Chevron or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan did not independently verify (and did not assume any obligation to undertake any such independent verification) any such information or its accuracy or completeness. J.P. Morgan did not conduct or was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Noble Energy or Chevron under any applicable laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on

 

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assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Noble Energy to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the merger will have the tax consequences described in “The Merger—Material U.S. Federal Income Tax Consequences” and that the other transactions contemplated by the merger agreement will be consummated as described in the merger agreement. J.P. Morgan also assumed that the representations and warranties made by Noble Energy and Chevron in the merger agreement and the related agreements were and will be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to Noble Energy with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on Noble Energy or on the contemplated benefits of the merger.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s written opinion dated July 20, 2020, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of Noble Energy common stock in the proposed merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration to the holders of any other class of securities, creditors or other constituencies of Noble Energy or the underlying decision by Noble Energy to engage in the merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed merger, or any class of such persons relative to the consideration in the proposed merger or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which Noble Energy common stock or Chevron common stock will trade at any future time.

The terms of the merger agreement, including the merger consideration, were determined through arm’s length negotiations between Noble Energy and Chevron, and the decision to enter into the merger agreement was solely that of the Noble Energy Board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Noble Energy Board in its evaluation of the proposed merger and should not be viewed as determinative of the views of the Noble Energy Board or management with respect to the proposed merger or the merger consideration.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodology in rendering its opinion to the Noble Energy Board, and contained in the presentation delivered to the Noble Energy Board on July 19, 2020 in connection with the rendering of such opinion and the summaries below do not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

Selected Public Trading Multiples

Using publicly available information, J.P. Morgan compared selected financial data of Noble Energy with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to Noble Energy. None of the selected companies reviewed is identical or directly comparable to Noble Energy. However, these companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered sufficiently similar in certain respects to Noble Energy. The analysis necessarily involves complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and

 

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other factors that could affect the companies differently than they would affect Noble Energy. The companies selected by J.P. Morgan were:

 

   

Apache Corporation

 

   

Continental Resources, Inc.

 

   

Devon Energy Corp.

 

   

Marathon Oil Corporation

Using publicly available information as of July 17, 2020, J.P. Morgan calculated and compared, for each selected company listed above and for Noble Energy, various financial multiples and ratios. For each of the following analyses performed by J.P. Morgan, estimated financial data for the selected companies based on information obtained from FactSet Research Systems. The information J.P. Morgan calculated for each of the selected companies included:

 

   

Multiple of firm value (calculated as the market value of the company’s common stock on a fully diluted basis, plus debt and other adjustments, including non-controlling interests, less cash) to estimated EBITDAX (defined as earnings before interest, taxes, depreciation, amortization and exploration expenses) for the fiscal years ending December 31, 2021 (which we refer to as “FYE 2021”) and December 31, 2022 (which we refer to as “FYE 2022”); and

 

   

Multiple of equity value (calculated as the market value of the company’s common stock on a fully diluted basis) to estimated operating cash flow (calculated as EBITDAX, less unlevered cash taxes, less other cash outflows and inflows, plus equity investment dividends) for FYE 2021 and FYE 2022.

This analysis indicated the following Firm Value/EBITDAX and Equity Value/Operating Cash Flow multiples:

 

     Firm Value / EBITDAX      Equity Value / Operating Cash Flow  
     2021E      2022E      2021E      2022E  

Apache Corporation

     7.5x        6.6x        3.2x        2.8x  

Continental Resources

     6.5x        5.6x        3.7x        3.2x  

Devon Energy Corp.

     4.8x        3.6x        3.4x        2.7x  

Marathon Oil Corporation

     5.4x        4.4x        3.3x        2.6x  

Noble Energy

     6.3x        5.1x        3.1x        2.4x  

J.P. Morgan did not rely solely on the quantitative results of the selected public company analysis, but also made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of Noble Energy and the selected companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, asset profiles and capital structures between Noble Energy and the companies included in the selected public company analysis. Based upon these judgments, J.P. Morgan selected multiple reference ranges for Noble Energy of 4.75x – 7.00x and 3.50x – 6.00x for firm value to estimated 2021 and 2022 EBITDAX, respectively and 3.00x – 4.00x and 2.25x – 3.25x for equity value to estimated 2021 and 2022 operating cash flow, respectively.

 

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After applying such ranges to the appropriate metrics for Noble Energy based on Noble Energy management’s Base case (as defined below) at the direction of the Noble Energy Board, based upon the advice of Noble Energy’s management, the analysis indicated the following implied equity value per share for the Noble Energy common stock ranges for Noble Energy common stock (resulting per share values were in all cases rounded to the nearest $0.25 per share):

Noble Energy Implied Equity Value Per Share Range

 

     Firm Value / EBITDAX      Equity Value / Operating Cash Flow  
         2021E              2022E              2021E              2022E      

Low

   $ 1.00      $ 0.25      $ 8.25      $ 8.25  

High

   $ 9.25      $ 12.50      $ 11.00      $ 12.00  

The ranges of implied equity value per share were compared to (i) the closing price per share of Noble Energy common stock of $9.66 on July 17, 2020 and (ii) the implied value of the merger consideration of $10.38 per share of Noble Energy common stock. The implied value of the merger consideration of $10.38 as used throughout this summary was calculated by multiplying the exchange ratio of 0.1191 shares of Chevron common stock by $87.19, the closing price per share of Chevron common stock on July 17, 2020.

Selected Transaction Multiples Analysis

Using publicly available information, J.P. Morgan examined selected transactions with respect to corporate transactions in the energy exploration and production (“E&P”) sector.

Using publicly available information, J.P. Morgan calculated, for each of the selected transactions listed below, the transaction value as a multiple of EBITDAX over the next twelve months (“NTM EBITDAX”). J.P. Morgan reviewed the following corporate transactions in the E&P sector (buyer / seller):

 

   

Callon / Carrizo

 

   

Oxy / Anadarko

 

   

Encana / Newfield

 

   

Noble Energy / Rosetta

 

   

Repsol / Talisman

 

   

CNOOC / Nexen

 

   

BHP / Petrohawk

 

   

ExxonMobil / XTO

 

   

Suncor / PetroCanada

 

   

Anadarko / Kerr McGee

 

   

ConocoPhillips / Burlington

 

   

ConocoPhillips / Gulf

 

   

Anadarko / Union Pacific

Based on the results of this analysis and other factors which J.P. Morgan considered appropriate based on its experience and professional judgment, J.P. Morgan selected a multiple reference range for firm value to NTM EBITDAX of 4.50x – 9.00x. For purposes of such calculation, NTM EBITDAX for Noble Energy reflected 50% 2020 Base case EBITDAX and 50% 2021 Base case EBITDAX, as directed by Noble Energy management.

 

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After applying this range to the appropriate metrics for Noble Energy based on the Noble Energy Base management case as directed by Noble Energy management, this analysis indicated the following implied equity value per share range for the Noble Energy common stock (resulting per share values were in all cases rounded to the nearest $0.25 per share):

Noble Energy Implied Equity Value Per Share Range

 

     FV / NTM EBITDAX  

Low

   ($ 1.00

High

   $ 14.75  

The ranges of implied equity value per share were compared to (i) the closing price per share of Noble Energy common stock of $9.66 on July 17, 2020 and (ii) the implied value of the merger consideration of $10.38 per share of Noble Energy common stock.

Discounted Cash Flow Analysis

J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied equity value per share for Noble Energy common stock based on four commodity price and activity cases provided to J.P. Morgan by Noble Energy management (which cases we refer to herein as “Base”, “Strip+”, “Strip+ Low” and “Upside”).

A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” The “unlevered free cash flows,” for purposes of the discounted cash flow analysis, refers to a calculation of the future cash flows generated by an asset without including in such calculation any debt servicing costs. “Present value” refers to the current value of an asset’s cash flows, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other appropriate factors. “Terminal value” refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period.

J.P. Morgan calculated the present value, as of June 30, 2020, of unlevered free cash flows that Noble Energy was forecasted to generate during fiscal years 2021 through 2029 based upon each of the Base case, the Strip+ case, the Strip+ Low case and the Upside case. J.P. Morgan also calculated a range of terminal asset values for Noble Energy at the end of the nine-year period ending 2029 by applying a terminal value growth rate ranging from (1.5%) to 1.5% of the unlevered free cash flow of Noble Energy during the final year of the nine-year period, which growth rate range was reviewed and approved by Noble Energy management.

The unlevered free cash flows and the range of terminal asset values were then discounted to present values using a range of discount rates from 10% to 12%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Noble Energy, and then were divided by the number of fully diluted shares outstanding at Noble Energy to arrive at a range of implied equity values per share of Noble Energy common stock for each of the Base case, the Strip+ case, the Strip+ Low case and the Upside case. At the direction of the Noble Energy Board, based upon the advice of Noble Energy’s management, J.P. Morgan assigned probability weightings provided by Noble Energy’s management to its discounted cash flow analyses for each case, which probability weightings provided by Noble Energy’s management were 37.5% weight to each of the Base case and the Strip+ case and 12.5% weight to each of the Upside case and the Strip+ Low case (the “Weighted Case”), and reflected Noble Energy management’s estimates with respect to the relative probabilities of the various cases most closely reflecting future economic conditions as of such time, subject to the risks, uncertainties and other factors discussed under “The Merger—Noble Energy Certain Unaudited Prospective

 

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Financial Information”. At the direction of the Noble Energy Board, based upon the advice of Noble Energy’s management, J.P. Morgan considered only the Weighted Case for purposes of the discounted cash flow analysis utilized in connection with rendering its opinion. Based on the Weighted Case, the discounted cash flow analysis indicated a range of implied equity values (rounded to the nearest $0.25 per share) of between $3.75 and $14.25 per share of Noble Energy common stock.

The ranges of implied equity value per share were compared to (i) the closing price per share of Noble Energy common stock of $9.66 on July 17, 2020 and (ii) the implied value of the merger consideration of $10.38 per share of Noble Energy common stock.

52-Week Historical Trading Range

For reference only and not as a component of its fairness analysis, J.P. Morgan reviewed the trading range for the Noble Energy common stock for the 52-week period ended July 17, 2020, which was $2.73 per share to $27.31 per share, and compared that range to (i) the closing price per share of Noble Energy common stock of $9.66 as of July 17, 2020 and (ii) the implied value of the merger consideration of $10.38 per share of Noble Energy common stock.

Analyst Price Target

For reference only and not as a component of its fairness analysis, J.P. Morgan reviewed certain publicly available equity research analyst price targets for the Noble Energy common stock available as of July 17, 2020, and noted that the range of such price targets was $6.80 per share to $25.00 per share and compared that range to (i) the closing price per share of Noble Energy common stock of $9.66 on July 17, 2020 and (ii) the implied value of the merger consideration of $10.38 per share of Noble Energy common stock.

Analyst Net Asset Value per Share

For reference only and not as a component of its fairness analysis, J.P. Morgan reviewed certain publicly available equity research analyst’s net asset valuation analyses and divided such valuation by Noble Energy’s fully diluted common shares outstanding, and noted that the range of such valuations was $6.00 per share to $27.00 per share and compared that range to (i) the closing price per share of Noble Energy common stock of $9.66 on July 17, 2020 and (ii) the implied value of the merger consideration of $10.38 per share of Noble Energy common stock.

Miscellaneous

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of Noble Energy. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.

Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or

 

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made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the selected companies reviewed as described in the above summary is identical to Noble Energy, and none of the selected transactions reviewed was identical to the merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Noble Energy. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analysis, may be considered similar to the merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to Noble Energy and the transactions compared to the merger.

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise Noble Energy with respect to the merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with Noble Energy and the industries in which it operates.

For services rendered in connection with the merger and the delivery of its opinion, Noble Energy has agreed to pay J.P. Morgan a transaction fee of $30 million, of which $4 million was payable by Noble Energy to J.P. Morgan in connection with J.P. Morgan’s delivery of its opinion and the balance of which becomes payable upon the closing of the merger. In addition, Noble Energy has agreed to pay J.P. Morgan an additional discretionary fee of up to $5 million upon the closing of the merger, with the amount to be determined in the sole discretion of Noble Energy. In addition, Noble Energy has agreed to reimburse J.P. Morgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Noble Energy and Chevron for which J.P. Morgan and such affiliates have received compensation of approximately $29,000 (after taking into account a credit to Noble Energy) with respect to Noble Energy and approximately $11.6 million with respect to Chevron. Such services during such period have included acting as joint lead arranger and bookrunner on Noble Energy’s credit facilities which closed in March 2018 and joint lead bookrunner on Chevron’s offering of debt securities which closed in May 2020. In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under outstanding credit facilities of Noble Energy and Chevron, for which it receives customary compensation or other financial benefits. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of Noble Energy and Chevron. In the ordinary course of J.P. Morgan’s business, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of Noble Energy or Chevron for its own account or for the accounts of customers and, accordingly, J.P. Morgan may at any time hold long or short positions in such securities or other financial instruments.

Noble Energy Unaudited Prospective Financial Information

Noble Energy does not, as a matter of course, publicly disclose long-term consolidated forecasts as to future performance, earnings or other results given, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. In connection with the Noble Energy Board’s consideration of the transaction, Noble Energy’s management prepared certain unaudited financial projections regarding Noble Energy’s future performance for the years 2020 through 2029 on a standalone basis without giving effect to the merger (the “Noble Energy management forecast”), and provided the Noble Energy management forecast to the Noble Energy Board and to Noble Energy’s financial advisor for its use in

 

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connection with its financial analyses (see the sections described above in this proxy statement/prospectus entitled “The Merger—Opinion of Noble Energy’s Financial Advisor” beginning on page [    ] of this proxy statement/prospectus). The Noble Energy management forecast based upon the internal financial model that Noble Energy has historically used in connection with strategic planning.

The summary of these projections is being included in this proxy statement/prospectus to give Noble Energy’s stockholders access to non-public information that was provided to the Noble Energy Board and Noble Energy’s financial advisor in the course of evaluating the proposed merger, and are not intended to influence your decision whether to vote in favor of the merger proposal or any other proposal at the special meeting. The inclusion of this information should not be regarded as an indication that any of Noble Energy or its advisors or other representatives or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future performance or events, or that it should be construed as financial guidance, and such summary projections set forth below should not be relied on as such.

While presented with numeric specificity, the Noble Energy management forecast reflects numerous estimates and assumptions that are inherently uncertain and may be beyond the control of Noble Energy, including, among others, Noble Energy’s assumptions about energy markets, production and sales volume levels, levels of oil, natural-gas and NGL reserves, operating results, competitive conditions, technology, availability of capital resources, levels of capital expenditures, contractual obligations, supply and demand for, the price of, and the commercialization and transporting of oil, natural gas, NGLs and other products or services, geopolitical and regulatory risks, risk of losing investment grade rating, and other matters described in the sections entitled “Cautionary Note Regarding Forward-Looking Statements”, “Where You Can Find More Information”, and “Risk Factors”, beginning on pages [    ], [    ] and [    ], respectively. The Noble Energy management forecast reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Noble Energy can give no assurance that the Noble Energy management forecast and the underlying estimates and assumptions will be realized. In addition, since the Noble Energy management forecast covers multiple years, such information by its nature becomes more speculative with each successive year. This information constitutes “forward-looking statements” and actual results may differ materially and adversely from those projected.

The Noble Energy management forecast was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither Noble Energy’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited prospective financial and operating information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability. The report of the independent registered public accounting firm to Noble Energy contained in its Annual Report on Form 10-K for the year ended December 31, 2019, which is incorporated by reference into this proxy statement/prospectus, relates to historical financial information of Noble Energy, and such report does not extend to the projections included below and should not be read to do so.

The prospective financial information included in this document has been prepared by, and is the responsibility of Noble Energy’s management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report included in this document relates to Chevron Corporation’s previously issued financial statements. It does not extend to the prospective financial information and should not be read to do so.

Furthermore, the Noble Energy management forecast does not take into account any circumstances or events occurring after the date it was prepared. Noble Energy can give no assurance that, had the Noble Energy

 

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management forecast been prepared as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. Except as required by applicable securities laws, Noble Energy does not intend to, and disclaims any obligation to, make publicly available any update or other revision to the Noble Energy management forecast to reflect circumstances existing since its preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error or to reflect changes in general economic or industry conditions. The Noble Energy management forecast does not take into account all the possible financial and other effects on Noble Energy of the merger, the effect on Noble Energy of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the Noble Energy management forecast does not take into account the effect on Noble Energy of any possible failure of the merger to occur. None of Noble Energy or its affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Noble Energy stockholder or other person regarding Noble Energy’s ultimate performance compared to the information contained in the Noble Energy management forecast or to the effect that the forecasted results will be achieved. The inclusion of the Noble Energy management forecast herein should not be deemed an admission or representation by Noble Energy or its advisors or any other person that it is viewed as material information of Noble Energy, particularly in light of the inherent risks and uncertainties associated with such forecasts.

In light of the foregoing, and considering that the special meeting will be held several months after the Noble Energy management forecast was prepared, as well as the uncertainties inherent in any forecasted information, Noble Energy stockholders are cautioned not to place undue reliance on such information, and Noble Energy urges all Noble Energy stockholders to review Noble Energy’s most recent SEC filings for a description of Noble Energy’s reported financial results. See “Where You Can Find More Information” beginning on page [    ].

Certain Assumptions

In preparing the prospective financial and operating information for Noble Energy described below, the management team of Noble Energy used three sets of commodity price assumptions: Base, Strip+ (based on oil and gas strip pricing as of June 24, 2020 for 2020—2024, with escalations for years 2025—2029) and Upside and two sets of drilling activity level assumptions: base activity and low activity. Noble Energy’s management prepared four separate sets of forecasts utilizing these assumptions in different combinations: (i) Base case, which utilizes Base case commodity price assumptions and base activity level assumptions, (ii) Strip+ case, which utilizes Strip+ price commodity assumptions and base activity level assumptions, (iii) Strip+ Low case, which utilizes Strip+ price commodity assumptions and low activity level assumptions and (iv) Upside case, which utilizes Upside commodity price assumptions and base activity levels. As further described under “Opinion of Noble Energy’s Financial Advisor” beginning on page [     ], at the direction of the Noble Energy Board, based upon the advice of Noble Energy’s management, Noble Energy’s financial advisor assigned probability weightings provided by Noble Energy’s management to each case for its discounted cash flow analysis as follows: Base case: 37.5%, Strip+ case: 37.5%, Upside case: 12.5% and Strip+ Low case: 12.5%.

Additional detail about the specific commodity price assumptions underlying Base, Strip+ and Upside commodity price decks is set forth in the tables below.

 

    Base pricing assumptions  
    2020E     2021E     2022E     2023E     2024E     2025E     2026E     2027E     2028E     2029E  

Commodity Prices

                   

Brent oil ($/Bbl)

  $ 44.11     $ 50.00     $ 51.00     $ 52.00     $ 54.00     $ 55.00     $ 55.00     $ 55.00     $ 55.00     $ 55.00  

WTI oil ($/Bbl)

  $ 39.60     $ 45.00     $ 46.00     $ 47.00     $ 49.00     $ 50.00     $ 50.00     $ 50.00     $ 50.00     $ 50.00  

Henry Hub gas ($/MMBtu)

  $ 1.96     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50  

 

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    Strip+ pricing assumptions  
    2020E     2021E     2022E     2023E     2024E     2025E     2026E     2027E     2028E     2029E  

Commodity Prices

                   

Brent oil ($/Bbl)

  $ 41.96     $ 43.02     $ 44.98     $ 46.71     $ 48.26     $ 50.00     $ 51.00     $ 52.00     $ 53.00     $ 55.00  

WTI oil ($/Bbl)

  $ 38.23     $ 40.37     $ 41.53     $ 42.71     $ 43.92     $ 45.00     $ 46.00     $ 47.00     $ 48.00     $ 50.00  

Henry Hub gas ($/MMBtu)

  $ 1.93     $ 2.65     $ 2.46     $ 2.39     $ 2.40     $ 2.42     $ 2.44     $ 2.46     $ 2.48     $ 2.50  

 

    Upside pricing assumptions  
    2020E     2021E     2022E     2023E     2024E     2025E     2026E     2027E     2028E     2029E  

Commodity Prices

                   

Brent oil ($/Bbl)

  $ 41.78     $ 55.00     $ 65.00     $ 65.00     $ 65.00     $ 65.00     $ 65.00     $ 65.00     $ 65.00     $ 65.00  

WTI oil ($/Bbl)

  $ 37.94     $ 50.00     $ 60.00     $ 60.00     $ 60.00     $ 60.00     $ 60.00     $ 60.00     $ 60.00     $ 60.00  

Henry Hub gas ($/MMBtu)

  $ 1.96     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50     $ 2.50  

In addition to the assumptions with respect to commodity prices, the Noble Energy management forecast is based on various other assumptions, including, but not limited to, the following principal assumptions with respect to the base activity level assumptions, which are utilized in the Base case, Strip+ case and Upside case:

 

   

In West Africa, the following development projects during 2020 through 2027 are included: (i) Alen gas monetization pipeline infrastructure project allowing for global LNG sales, (ii) Diega infrastructure-led development of a nearby discovered oil field from the Alen platform with phase two expansion of resources across the Equatorial Guinea and Cameroon maritime waters, and (iii) greenfield development of discovered natural gas field in Cameroon and Equatorial Guinea maritime waters;

 

   

In Eastern Mediterranean, the following development projects during 2022 through 2025 are included: (i) Leviathan regional export module project to expand production capabilities of the platform, (ii) Cyprus greenfield development of the Aphrodite field, and (iii) development of a joint export pipeline connecting Aphrodite and Leviathan fields to Egyptian LNG facilities;

 

   

Exploration projects include offshore Colombia oil prospects, exploration capital 2021 through 2022 with development starting in 2025 and U.S. onshore development in the Powder River Basin;

 

   

In the DJ Basin, the number of wells drilled per year average: 2020: 82; 2021: 102; 2022 and beyond: 100-115;

 

   

In the Permian Basin, the number of wells drilled per year average: 2020: 19; 2021: 28; 2022 and beyond: 40-60;

 

   

Working capital sources / (uses) (in millions): 2020: $(590); 2021: $(228); 2022: $(87); 2023 and following years: $(30-50) annually; and

 

   

Dividend per share will be $0.18 in 2020 and then remain constant at $0.08 during each of the following years.

By comparison, the low activity level assumptions, which are utilized in the Strip+ Low case, contain the following assumptions:

 

   

No Eastern Mediterranean development projects nor exploration projects included;

 

   

In the DJ Basin, the number of wells drilled per year average: 2020: 68; 2021: 0; 2022 and beyond: 60-70;

 

   

In the Permian Basin, the number of wells drilled per year average: 2020: 18; 2021: 9; 2022 and beyond: 25-40;

 

   

Working capital sources / (uses) (in millions): 2020: $(598); 2021: $(202); 2022: $(73); 2023 and following years: $(30-50) annually; and

 

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Dividend per share will be $0.18 in 2020 and then remain constant at $0.08 during each of the following years.

The Noble Energy management forecast also reflects assumptions regarding the continuing nature of ordinary course operations that may be subject to change.

The following table summarizes the Noble Energy management forecast as of a June 30, 2020 valuation date for the fiscal years 2020 through 2029 ($ in millions):

 

    2020(6)     2021     2022     2023     2024     2025     2026     2027     2028     2029  

Base Case

                   

Total Net Production (Mboe/d)

    337       363       389       407       409       476       583       622       616       620  

EBITDAX(1)

  $ 1,594     $ 1,808     $ 2,364     $ 2,650     $ 2,919     $ 3,628     $ 4,571     $ 5,068     $ 5,150     $ 5,142  

Capital Expenditures(2)

  $ 1,058     $ 1,233     $ 1,644     $ 1,944     $ 2,370     $ 2,423     $ 2,479     $ 2,031     $ 1,629     $ 1,420  

Free Cash Flow(3)

  $ 132     $ 109     $ 172     $ 4     $ (317   $ 462     $ 1,312     $ 2,127     $ 2,312     $ 2,344  

Net Debt / EBITDAX(4)

    4.9x       4.4x       3.4x       3.1x       2.9x       2.3x       1.5x       1.0x       0.6x       0.1x  

Strip+ Case

                   

Total Net Production (Mboe/d)

    337       363       389       407       409       476       583       622       616       620  

EBITDAX(1)

  $ 1,531     $ 1,610     $ 2,133     $ 2,414     $ 2,630     $ 3,328     $ 4,283     $ 4,830     $ 4,992     $ 5,142  

Capital Expenditures(2)

  $ 1,058     $ 1,233     $ 1,644     $ 1,944     $ 2,370     $ 2,423     $ 2,479     $ 2,031     $ 1,629     $ 1,420  

Free Cash Flow(3)

  $ 68     $ (92   $ (61   $ (239   $ (617   $ 147     $ 1,005     $ 1,888     $ 2,160     $ 2,344  

Net Debt / EBITDAX(4)

    5.1x       5.1x       4.0x       3.7x       3.7x       2.9x       2.0x       1.4x       1.0x       0.5x  

Upside Case

                   

Total Net Production (Mboe/d)

    337       363       389       407       409       476       583       622       616       620  

EBITDAX(1)

  $ 1,533     $ 2,205     $ 3,114     $ 3,378     $ 3,609     $ 4,311     $ 5,387     $ 5,974     $ 6,061     $ 6,080  

Capital Expenditures(2)

  $ 1,058     $ 1,233     $ 1,644     $ 1,944     $ 2,370     $ 2,423     $ 2,479     $ 2,031     $ 1,629     $ 1,420  

Free Cash Flow(3)

  $ 50     $ 465     $ 927     $ 736     $ 379     $ 1,151     $ 2,088     $ 2,975     $ 3,158     $ 3,174  

Net Debt / EBITDAX(4)

    5.1x       3.5x       2.2x       1.9x       1.7x       1.2x       0.6x       0.0x       NM (7)      NM (7) 

Strip+ Low Case

                   

Total Net Production (Mboe/d)

    337       307       319       338       325       363       374       387       402       393  

EBITDAX(1)

  $ 1,445     $ 1,255     $ 1,598     $ 1,871     $ 1,994     $ 2,343     $ 2,590     $ 2,650     $ 2,874     $ 2,931  

Capital Expenditures(5)

  $ 975     $ 487     $ 861     $ 1,179     $ 1,163     $ 876     $ 1,061     $ 902     $ 979     $ 897  

Free Cash Flow(3)

  $ 66     $ 311     $ 189     $ 29     $ 0     $ 817     $ 883     $ 1,112     $ 1,092     $ 1,103  

Net Debt / EBITDAX(4)

    5.4x       6.3x       4.9x       4.2x       4.0x       3.2x       2.6x       2.1x       1.6x       1.3x  

 

(1)

EBITDAX is defined as net income (loss) before interest expense; income taxes; depreciation, depletion and amortization; exploration expenses; asset impairments; and loss (gain) on commodity derivative instruments, net of cash settlements in 2020. EBITDAX is a non-GAAP financial measure as it excludes amounts included in net income (loss), the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to net income (loss) or other measures derived in accordance with GAAP.

(2)

2020 – 2022 capital expenditures for the three base activity cases include the following assumed (i) U.S. Onshore – 2020: $559; 2021: $863; 2022: $927; (ii) International – 2020: $215; 2021: $131; 2022: $359; (iii) Exploration/Other – 2020: $29; 2021: $82; 2022: $87; and (iv) Noble Midstream – 2020: $255; 2021: $157; 2022: $271.

(3)

Free Cash Flow is defined as cash flow from operations before working capital, less consolidated capital investments. Free Cash Flow is a non-GAAP financial measure as it excludes amounts included in cash flow from operations, the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to cash flow from operations or other measures derived in accordance with GAAP.

(4)

Net debt is defined as long-term debt, including financing leases, minus cash and cash equivalents. Net debt is a non-GAAP financial measure, and its most directly comparable measure calculated in accordance with GAAP is long-term debt. This measure should not be considered as an alternative to long-term debt or other measures derived in accordance with GAAP.

 

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(5)

2020 – 2022 capital expenditures for the low activity case (Strip+ Low) include the following assumed (i) U.S. Onshore –2020: $479; 2021: $233; 2022: $591; (ii) International – 2020: $215; 2021: $125; 2022: $141; (iii) Exploration/Other – 2020: $30; 2021: $(11); 2022: $(13); and (iv) Noble Midstream – 2020: $251; 2021: $140; 2022: $142.

(6)

Noble Energy’s 2020 projections were formed in May 2020 and do not include second quarter actual results, anticipated COVID economic recovery in 2020 or Noble Energy’s actions taken to bring curtailed production back online in July 2020 ahead of plan.

(7)

Not meaningful.

Noble Energy does not intend to update or otherwise revise the above unaudited financial and operating forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such unaudited financial and operating forecasts are no longer appropriate, except as may be required by applicable law.

Interests of Directors and Executive Officers of Noble Energy in the Merger

In considering the recommendation of the Noble Energy Board that Noble Energy stockholders vote “FOR” the merger proposal and the merger-related compensation proposal, Noble Energy stockholders should be aware that Noble Energy’s directors and executive officers have interests in the merger that may be different from, or in addition to, those of Noble Energy stockholders generally. The Noble Energy Board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, in approving the merger agreement and in recommending the applicable merger-related proposals.

The following discussion sets forth certain of these interests in the merger of each person who has served as an executive officer or non-employee director of Noble Energy since January 1, 2019.

Treatment of Noble Energy Equity-Based Awards in the Merger

The merger agreement provides for the treatment set forth below with respect to the Noble Energy equity-based awards that are outstanding at the effective time of the merger. As of the date hereof, approximately 45% of Noble Energy’s employees hold one or more outstanding unvested Noble Energy equity-based awards.

Noble Energy Stock Options

Upon completion of the merger, each outstanding Noble Energy stock option will be converted into an option to acquire, on the same terms and conditions as were applicable under such Noble Energy stock option immediately prior to the completion of the merger (including any provisions for acceleration), the number (rounded down to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy stock option immediately prior to the completion of the merger by (ii) the merger consideration.

The exercise price per share of Chevron common stock subject to any such converted Noble Energy stock option at and after completion of the merger will be an amount (rounded up to the nearest one hundredth of a cent) equal to (i) the exercise price per share of Noble Energy common stock subject to such Noble Energy stock option immediately prior to the completion of the merger divided by (ii) the merger consideration.

All of the Noble Energy stock options are currently out-of-the-money, which means that, as of the date hereof, the per share exercise price applicable to each Noble Energy stock option exceeds the market value of a share of Noble Energy’s common stock. After giving effect to the conversion described in the preceding paragraph, all of the converted Noble Energy stock options will remain out-of-the-money to approximately the same extent that the Noble Energy stock options were out-of-the-money immediately prior to the completion of the merger as the conversion of such Noble Energy stock options is designed to preserve the aggregate “spread” (i.e., the difference between the per share exercise price applicable to the stock option and the market value of a share of the securities to which the stock option relates) applicable to such Noble Energy stock options. As a result, at the effective time of the merger, there will be no intrinsic value associated with the converted Noble Energy stock options.

 

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The following sets forth, for each of Noble Energy’s executive officers(1), the aggregate number of shares of Noble Energy common stock subject to vested stock options and unvested stock options held by such executive officers as of an assumed closing date of November 30, 2020.

 

Name

   Number of
Shares
Subject to
Outstanding
Vested
Noble
Energy
Stock
Options
     Number of
Shares Subject
to Outstanding
Unvested
Noble Energy
Stock Options
 

David L. Stover(2)

     1,098,706        147,117  

Brent J. Smolik(3)

     105,144        93,193  

Kenneth M. Fisher(2)

     439,256        44,177  

Rachel G. Clingman(4)

     41,627        35,676  

John K. Elliott(2)

     197,760        27,878  

 

(1)

Noble Energy’s other executive officers held the following aggregate number of shares of Noble Energy common stock subject to outstanding Noble Energy stock options as of an assumed closing date of November 30, 2020: (i) John T. Lewis: 198,118 vested shares and 22,904 unvested shares (with an exercise price that ranges from a minimum of $22.39 per share to a maximum of $62.33 per share); (ii) Christine M. Michel: 17,146 vested shares and 34,294 unvested shares (with an exercise price of $20.22 per share); (iii) Thomas H. Walker: 76,105 vested shares and 17,986 unvested shares (with an exercise price that ranges from a minimum of $22.39 per share to a maximum of $62.33 per share); (iv) Terry R. Gerhart (whose employment with Noble Energy ended in August 2019): 106,544 vested shares (with an exercise price that ranges from a minimum of $30.89 per share to a maximum of $62.33 per share); and (v) A. Lee Robison (whose employment with Noble Energy ended in March 2019): 155,800 vested shares and 4,298 unvested shares (with an exercise price that ranges from a minimum of $30.89 per share to a maximum of $62.33 per share).

(2)

The exercise price applicable to such Noble Energy stock options ranges from a minimum of $22.39 per share to a maximum of $62.33 per share.

(3)

The exercise price applicable to such Noble Energy stock options ranges from a minimum of $22.39 per share to a maximum of $25.17 per share.

(4)

The exercise price applicable to such Noble Energy stock options ranges from a minimum of $22.39 per share to a maximum of $36.93 per share.

 

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The following sets forth, for each of Noble Energy’s non-employee directors, the aggregate number of shares of Noble Energy common stock subject to stock options held by such non-employee directors as of an assumed closing date of November 30, 2020.

 

Name

   Number of
Shares
Subject to
Noble
Energy
Stock
Options(1)
 

Jeffrey L. Berenson(2)

     42,140  

James E. Craddock(3)

     29,391  

Barbara J. Duganier

     —    

Thomas J. Edelman(2)

     42,140  

Holli C. Ladhani

     —    

Scott D. Urban(2)

     42,140  

William T. Van Kleef(2)

     42,140  

Martha B. Wyrsch

     —    

Michael A. Cawley(2)(4)

     42,140  

Edward F. Cox(2)(5)

     42,140  

 

(1)

All Noble Energy stock options reflected in the table are fully vested.

(2)

The exercise price applicable to such Noble Energy stock options ranges from a minimum of $31.65 per share to a maximum of $62.33 per share.

(3)

The exercise price applicable to such Noble Energy stock options ranges from a minimum of $31.65 per share to a maximum of $39.46 per share.

(4)

Mr. Cawley ceased service as a non-employee director of Noble Energy in April 2020. The Noble Energy stock options that were held by Mr. Cawley upon his cessation of service remain outstanding and will be converted directly into stock options based on Chevron common stock. Mr. Cawley does not hold any other outstanding Noble Energy equity-based awards.

(5)

Mr. Cox ceased service as a non-employee director of Noble Energy in April 2019. The Noble Energy stock options that were held by Mr. Cox upon his cessation of service remain outstanding and will be converted directly into stock options based on Chevron common stock. Mr. Cox does not hold any other outstanding Noble Energy equity-based awards.

As the Noble Energy stock options are being converted directly into stock options based on Chevron common stock, no monetary value is being received by Noble Energy’s executive officers or non-employee directors in connection with the conversion of such Noble Energy stock options. However, the vesting of any unvested converted Noble Energy stock options would accelerate in the event of an executive officer’s Qualifying Termination (as defined below) or a non-employee director’s involuntary termination of board membership following the merger.

Noble Energy Restricted Stock Unit Awards

Upon completion of the merger, each outstanding Noble Energy RSU award (which is an award of cash-settled restricted stock units that corresponds to shares of Noble Energy common stock) will be converted into a Chevron RSU award on the same terms and conditions as were applicable under such Noble Energy RSU award immediately prior to the completion of the merger (including any provisions for acceleration), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy RSU award immediately prior to the completion of the merger by (ii) the merger consideration. Any amounts relating to dividend equivalent rights, if any, granted with respect to a Noble Energy RSU award that are accrued but unpaid as of the completion of the merger will carry over and will be paid if required by and in accordance with the terms and

 

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conditions as were applicable to such Noble Energy RSU award immediately prior to the completion of the merger.

The following sets forth, for each of Noble Energy’s executive officers(1), the aggregate number of shares of Noble Energy common stock subject to outstanding Noble Energy RSU awards, and the amount of accrued but unpaid dividend equivalent rights relating thereto, held by such executive officers as of an assumed closing date of November 30, 2020.

 

Name

  
Number
of Shares
Subject
to Noble
Energy
RSU
Awards
     Amount of
Accrued
but
Unpaid
Dividend
Equivalent
Rights
 

David L. Stover

     151,034      $ 44,682  

Brent J. Smolik

     75,215      $ 22,145  

Kenneth M. Fisher

     42,108      $ 12,512  

Rachel G. Clingman

     26,931      $ 7,996  

John K. Elliott

     27,154      $ 8,141  

 

(1)

Noble Energy’s other executive officers held the following aggregate number of shares of Noble Energy common stock subject to outstanding Noble Energy RSU awards, and the following amount of accrued but unpaid dividend equivalent rights relating thereto, as of an assumed closing date of November 30, 2020: (i) John T. Lewis: 22,245 shares and $6,733 in dividend equivalent rights; (ii) Christine M. Michel: 12,645 shares and $2,276 in dividend equivalent rights; (iii) Robin H. Fielder: 12,645 shares and $2,276 in dividend equivalent rights; and (iv) Thomas H. Walker: 17,111 shares and $5,179 in dividend equivalent rights.

As the Noble Energy RSU awards are being converted directly into awards based on Chevron common stock, no monetary value is being received by Noble Energy’s executive officers in connection with the conversion of such Noble Energy RSU awards. However, the vesting of any unvested converted Noble Energy RSU awards would accelerate in the event of an executive officer’s Qualifying Termination following the merger. For the estimated values of the potential accelerated vesting of the Noble Energy RSU awards (including the payment of accrued but unpaid dividend equivalent rights) held by Noble Energy’s named executive officers, see the “Equity” column of the table below under “—Quantification of Payments and Benefits to Noble Energy’s Named Executive Officers.”

None of Noble Energy’s non-employee directors holds a Noble Energy RSU award as of the date hereof or is expected to hold a Noble Energy RSU award as of an assumed closing date of November 30, 2020.

Noble Energy Restricted Stock Awards

Upon completion of the merger, each Noble Energy RS award (which is an award of shares of restricted Noble Energy common stock that are subject to vesting, repurchase or other lapse restriction solely based on continued service) will be converted into an award, on the same terms and conditions as were applicable under such Noble Energy RS award immediately prior to the completion of the merger (including any provisions for acceleration) with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy RS award immediately prior to the completion of the merger by (ii) the merger consideration. Any amounts relating to dividend equivalent rights, if any, granted with respect to a Noble Energy RS award that are accrued but unpaid as of the completion of the merger will carry over and will be paid if required by and in accordance with the terms and conditions as were applicable to such Noble Energy RS award immediately prior to the completion of the merger.

 

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The following sets forth, for each of Noble Energy’s executive officers(1), the aggregate number of shares of Noble Energy common stock subject to outstanding Noble Energy RS awards, and the amount of accrued but unpaid dividend equivalent rights relating thereto, held by such executive officers as of an assumed closing date of November 30, 2020.

 

Name

   Number of
Shares
Subject to
Noble
Energy RS
Awards
     Amount of
Accrued but
Unpaid
Dividend
Equivalent
Rights
 

David L. Stover

     198,919      $ 88,394  

Brent J. Smolik

     223,426      $ 118,482  

Kenneth M. Fisher

     57,743      $ 27,141  

Rachel G. Clingman

     62,774      $ 38,443  

John K. Elliott

     36,470      $ 16,714  

 

(1)

Noble Energy’s other executive officers held the following aggregate number of shares of Noble Energy common stock subject to outstanding Noble Energy RS awards, and the following amount of accrued but unpaid dividend equivalent rights relating thereto, as of an assumed closing date of November 30, 2020: (i) John T. Lewis: 29,680 shares and $13,514 in dividend equivalent rights; (ii) Christine M. Michel: 45,615 shares and $16,124 in dividend equivalent rights; (iii) Thomas H. Walker: 23,121 shares and $10,710 in dividend equivalent rights and (iv) A. Lee Robison (whose employment with Noble Energy ended in March 2019): 3,399 shares and $3,671 in dividend equivalent rights. Robin H. Fielder does not hold any outstanding Noble Energy RS awards. However, as of an assumed closing date of November 30, 2020, Ms. Fielder held an outstanding award of 11,160 restricted units that were granted under the Noble Midstream Partners LP 2016 Long-Term Incentive Plan (the “NBLX LTIP”), and $13,972 in accrued but unpaid distributions with respect to such restricted units.    

The following sets forth, for each of Noble Energy’s non-employee directors, the aggregate number of shares of Noble Energy common stock subject to outstanding Noble Energy RS awards, and the accrued but unpaid dividend equivalent rights relating thereto, held by such non-employee directors as of an assumed closing date of November 30, 2020.

 

Name

   Number of
Shares
Subject to
Noble
Energy RS
Awards (1)
     Amount of
Accrued but
Unpaid
Dividend
Equivalent
Rights
 

Jeffrey L. Berenson

     10,116      $ 1,821  

James E. Craddock

     10,116      $ 1,821  

Barbara J. Duganier

     10,116      $ 1,821  

Thomas J. Edelman

     10,116      $ 1,821  

Holli C. Ladhani

     10,116      $ 1,821  

Scott D. Urban

     10,116      $ 1,821  

William T. Van Kleef

     10,116      $ 1,821  

Martha B. Wyrsch

     21,464      $ 3,864  

As the Noble Energy RS awards are being converted directly into awards based on Chevron common stock, no monetary value is being received by Noble Energy’s executive officers or non-employee directors in connection with the conversion of such Noble Energy RS awards. However, the vesting of any unvested converted Noble Energy RS awards would accelerate in the event of an executive officer’s Qualifying Termination or a non-employee director’s involuntary termination of board membership following the merger. In addition, the merger will constitute a “change in control” under the NBLX LTIP such that the restricted unit

 

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award held by Ms. Fielder would accelerate in the event of her termination without cause following the merger. For the estimated values of the potential accelerated vesting of the Noble Energy RS awards (including the payment of accrued but unpaid dividend equivalent rights) held by Noble Energy’s named executive officers, see the “Equity” column of the table below under “—Quantification of Payments and Benefits to Noble Energy’s Named Executive Officers.”

Noble Energy Performance Awards

Upon completion of the merger, each Noble Energy PS award (which is an award of notional shares of restricted Noble Energy common stock, whose vesting is conditioned in full or in part based on achievement of performance goals or metrics) will be converted into an award, on the same terms and conditions as were applicable under such Noble Energy PS award immediately prior to the completion of the merger (other than any performance-based vesting conditions), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy PS award (assuming that any performance-based vesting conditions applicable to such Noble Energy PS award for any performance period that has not been completed as of the effective time of the merger are achieved at the greater of “target” performance or actual performance as of the effective time of the merger) by (ii) the merger consideration. Any amounts relating to dividend equivalent rights, if any, granted with respect to a Noble Energy PS award that are accrued but unpaid as of the completion of the merger will carry over and will be paid if required by and in accordance with the terms and conditions as were applicable to such Noble Energy PS award immediately prior to the completion of the merger.

The following sets forth, for each of Noble Energy’s executive officers(1), the aggregate number of shares of Noble Energy common stock subject to outstanding Noble Energy PS awards based on target performance of 100% (maximum performance is 200%), and the amount of accrued but unpaid dividend equivalent rights relating thereto, held by such executive officers as of an assumed closing date of November 30, 2020.

 

Name

   Number of
Shares
Subject to
Noble
Energy PS
Awards at
Target
     Amount of
Accrued but
Unpaid
Dividend
Equivalent
Rights at
Target
 

David L. Stover

     539,194      $ 297,437  

Brent J. Smolik

     205,366      $ 79,998  

Kenneth M. Fisher

     160,217      $ 93,565  

Rachel G. Clingman

     73,962      $ 29,057  

John K. Elliott

     100,167      $ 56,878  

 

(1)

Noble Energy’s other executive officers held the following aggregate number of shares of Noble Energy common stock subject to outstanding Noble Energy PS awards based on target performance of 100% (maximum performance is 200%), and the following amount of accrued but unpaid dividend equivalent rights relating thereto, as of an assumed closing date of November 30, 2020: (i) John T. Lewis: 81,331 shares and $45,764 in dividend equivalent rights; (ii) Christine M. Michel: 25,290 shares and $4,552 in dividend equivalent rights; (iii) Robin H. Fielder: 25,290 shares and $4,552 in dividend equivalent rights; (iv) Thomas H. Walker: 63,807 shares and $36,548 in dividend equivalent rights; and (v) A. Lee Robison (whose employment with Noble Energy ended in March 2019): 14,567 shares and $15,732 in dividend equivalent rights.

As the Noble Energy PS awards are being converted directly into awards based on Chevron common stock, no monetary value is being received by Noble Energy’s executive officers in connection with the conversion of such Noble Energy PS awards. However, the versting of any unvested converted Noble Energy PS awards would accelerate in the event of an executive officer’s Qualifying Termination following the merger. For the estimated

 

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values of the potential accelerated vesting of the Noble Energy PS awards (including the payment of accrued but unpaid dividend equivalent rights) held by Noble Energy’s named executive officers, see the “Equity” column of the table below under “—Quantification of Payments and Benefits to Noble Energy’s Named Executive Officers.”

None of Noble Energy’s non-employee directors holds a Noble Energy PS award as of the date hereof or is expected to hold a Noble Energy PS award as of an assumed closing date of November 30, 2020.

Other Benefits

Retention, Recognition and Integration Pool

Given the importance of preserving value and managing risk during the pendency of the transaction and in order to ensure successful integration, the Noble Energy Board has designated a pool of funds (the “Pool”) to achieve those goals. After agreeing on all elements of transaction value including the exchange ratio, Noble Energy introduced the possibility of a Pool, and Noble Energy and Chevron agreed upon the importance of the Pool and that the Pool may be up to but will not exceed $40,000,000 cash. The Compensation, Benefits and Stock Option Committee of the Noble Energy Board (the “Noble Energy Compensation Committee”), in its sole discretion, has been authorized to oversee the Pool, including the determination of recipients and allocations, with any allocations to Noble Energy’s named executive officers being subject to approval in accordance with the terms of the charter of the Noble Energy Compensation Committee.

Through a comprehensive evaluation process, the Noble Energy Compensation Committee has identified employees who are necessary to retain and incentivize to ensure the continued successful operation of Noble Energy’s business through the closing of the merger, to mitigate risk and to achieve a successful integration with Chevron, and the Noble Energy Compensation Committee has determined that more than 400 employees of Noble Energy will be eligible to receive an allocation from the Pool, which will include Noble Energy’s executive officers.

The allocation made to each of Noble Energy’s executive officers will be payable in two separate cash installments, with (i) 50% payable on the closing date of the merger, subject to the executive officer’s continued employment by Noble Energy through such date, and (ii) 50% payable on the earlier to occur of (x) the date that is 90 days following the closing date of the merger, subject to the executive officer’s continued employment and efforts through such date, or (y) the date of the executive officer’s Qualifying Termination. The allocation is also subject to each executive officer using reasonable efforts to support the integration and transaction processes; to collaborate with Noble Energy and Chevron to support the orderly integration of Noble Energy assets, and operations along with competitive intelligence and technical capabilities into Chevron; and to agree to abide by certain restrictive covenants.

Approximately 51 percent of the Pool has been allocated to be payable to Noble Energy employees who are not named executive officers, senior vice presidents or vice presidents, and approximately 31 percent of the Pool has been allocated to be payable to Noble Energy’s named executive officers. The following sets forth the allocation from the Pool made to each of Noble Energy’s executive officers(1), which allocation is subject to the satisfaction of certain conditions described above in order to become payable.

 

Name

   Allocation  

David L. Stover

   $ 4,750,000  

Brent J. Smolik

   $ 2,750,000  

Kenneth M. Fisher

   $ 1,500,000  

Rachel G. Clingman

   $ 1,500,000  

John K. Elliott

   $ 2,000,000  

 

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(1)

The following allocation applies to Noble Energy’s other executive officers: (i) John T. Lewis: $1,000,000; (ii) Christine M. Michel: $1,000,000; (iii) Robin H. Fielder: $400,000; and (iv) Thomas H. Walker: $600,000.

For more information on the allocations under the Pool to Noble Energy’s named executive officers, see the “Other” column of the table below under “—Quantification of Payments and Benefits to Noble Energy’s Named Executive Officers.”

Short-Term Incentive Plan Amendment

All of Noble Energy’s employees, including Noble Energy’s executive officers, participate in the Noble Energy, Inc. Short-Term Incentive Plan (as amended from time to time, the “STIP”). Under the terms of the STIP, bonus payments could range from 0% to 250% of a participant’s target bonus under the STIP for a given plan year. However, in order to promote retention and preserve appropriate incentives, Noble Energy and Chevron agreed that the Noble Energy Board is authorized to amend the STIP to provide that each participant thereunder may receive a bonus for the 2020 plan year performance period through the closing of the merger in an amount that is no greater than the amount of such participant’s target bonus under the STIP for the 2020 plan year, pro-rated through the effective time of the merger.

As described below under “—Potential Severance Payments and Benefits in Connection with the Merger—Change of Control Severance Plan for Executives,” if one of Noble Energy’s executive officers incurs a Qualifying Termination under the Executive COC Plan (as defined below), the executive officer would generally receive, among other payments and benefits and subject to the satisfaction of certain conditions, payment of an amount in cash equal to the executive officer’s pro-rata target bonus for the year of termination, which is the same amount that would be payable to the executive officer pursuant to the terms of the STIP as described above. For the avoidance of doubt, each of Noble Energy’s executive officers will only be entitled to receive a single payment in respect of the STIP for the 2020 plan year, whether such payment is provided pursuant to the terms of the STIP or the Executive COC Plan. For more information on the payment in respect of the STIP for the 2020 plan year that would be payable to Noble Energy’s named executive officers in connection with the merger, see the “Cash” column of the table below under “—Quantification of Payments and Benefits to Noble Energy’s Named Executive Officers.”

Potential Severance Payments and Benefits in Connection with the Merger

Change of Control Severance Plan for Executives

Each of Noble Energy’s executive officers participates in the Noble Energy, Inc. Amended and Restated 2020 Change of Control Severance Plan for Executives (the “Executive COC Plan”).

The Executive COC Plan provides that if an executive officer incurs a Qualifying Termination, and the executive officer signs and does not revoke a general release of claims that includes certain confidentiality, non-solicitation and non-disparagement obligations, the executive officer will generally receive the following severance benefits: (i) an amount in cash equal to the executive officer’s Annual Cash Compensation (as defined below), multiplied by (x) 2.99 for Mr. Stover or (y) 2.5 for a Senior Executive (which includes each of Noble Energy’s executive officers other than Mr. Stover); (ii) an amount in cash equal to the executive officer’s pro-rata target bonus for the year of termination; (iii) reimbursement of outplacement services (up to a maximum of $15,000); (iv) an amount in cash equal to the monthly cost of continuation coverage for welfare benefit coverages (i.e., medical, dental, vision, and life insurance), less the monthly premium paid by similarly-situated active employees of Noble Energy for such coverages, multiplied by (x) 36 months for Mr. Stover or (y) 30 months for a Senior Executive; and (v) accelerated vesting of outstanding equity or equity-based awards (with any performance conditions applicable to such awards deemed achieved at target and the exercise period of any stock option extended to the fifth anniversary of the date of termination or, if earlier, the original expiration date of such stock option). The foregoing severance benefits will generally be paid to an executive officer no later than 70 days after the date of the Qualifying Termination, provided that outplacement services will only be paid as reimbursement for reasonable fees actually incurred by the executive officer.

 

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For purposes of the Executive COC Plan, the terms below are generally defined as follows:

 

   

“Annual Cash Compensation” means an executive officer’s (i) highest annualized salary during the period beginning immediately prior to a change of control and ending on the date of a Qualifying Termination, plus (ii) the greater of (x) the executive officer’s annual target bonus for the year of termination or (y) the average annual bonus paid or payable to the executive officer for the three-year period immediately preceding the change of control (or, if such executive officer was not employed for the full three-year period, then the average bonus shall be determined based on the number of years that the executive officer has been employed), annualizing the bonus during the executive officer’s year of hire if less than a full year.

 

   

“Cause” means a determination that an executive officer has engaged in any action or omission that (i) constitutes gross negligence or willful misconduct in the performance of the executive officer’s duties, (ii) constitutes a material breach of any provision of any agreement between the executive officer and the executive officer’s employer, (iii) constitutes an act of theft, fraud, embezzlement, misappropriation, or willful breach of a fiduciary duty with respect to the executive officer’s employer, or (iv) results in the executive officer’s conviction of, plea of no contest to, or receipt of adjudicated probation or deferred adjudication in connection with a crime involving fraud, dishonesty, or moral turpitude, or any felony (or a crime of similar import in a foreign jurisdiction).

 

   

“Good Reason” means any of the following actions taken within two years after a change of control without the prior consent of an executive officer: (i) a material diminution in (x) the executive officer’s authority, duties or responsibilities, (y) the authority, duties or responsibilities of the supervisor to whom the executive officer is required to report or (z) the budget over which the executive officer retains authority; (ii) a reduction in the executive officer’s total annual compensation, if such reduction is a material negative change in the executive officer’s employment relationship; (iii) a significant reduction in the level, or a significant increase in the cost to the executive officer, of the employee benefits and perquisites provided to the executive officer; or (iv) a requirement that the executive officer relocate to a principal place of employment that is more than 50 miles from the location where the executive officer was principally employed immediately prior to the change of control.

 

   

“Qualifying Termination” means an executive officer’s termination of employment that occurs within two years following a change of control and which is (i) by the employer without Cause (and not due to retirement, death or disability) or (ii) by the executive officer for Good Reason.

The merger will constitute a “change of control” under the Executive COC Plan. For the quantification of the value of the severance payments and benefits described above that would be payable to Noble Energy’s named executive officers in the event of a Qualifying Termination following the merger, see the “Cash” and “Benefits” columns of the table below under “—Quantification of Payments and Benefits to Noble Energy’s Named Executive Officers.”

Deferred Compensation Plan

Each of Noble Energy’s executive officers is eligible to participate in the Noble Energy, Inc. 2005 Deferred Compensation Plan (as amended from time to time, the “Deferred Compensation Plan”). The Deferred Compensation Plan allows participants to defer portions of their salary and bonus to be received at the time of departure and to receive certain matching, age-weighted and transition contributions from Noble Energy. The Noble Energy contributions are subject to forfeiture unless they vest in accordance with the terms of the Deferred Compensation Plan. As of the date hereof, all of Noble Energy’s named executive officers who participate in the Deferred Compensation Plan are fully vested in such contributions under the Deferred Compensation Plan except for Mr. Smolik and Ms. Clingman. The Deferred Compensation Plan provides that, in the event of a change of control, all contributions made to a participant’s account under the Deferred Compensation Plan will fully vest.

 

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The following sets forth, for each of Noble Energy’s named executive officers, the amount of unvested contributions made to such executive officer’s account under the Deferred Compensation Plan as of an assumed closing date of November 30, 2020.

 

Name

   Amount of
Unvested
Contributions
 

David L. Stover

     —    

Brent J. Smolik

   $ 93,697  

Kenneth M. Fisher

     —    

Rachel G. Clingman

   $ 52,441  

John K. Elliott

     —    

The merger will constitute a “change of control” under the Deferred Compensation Plan and, as a result, the unvested contributions reflected in the table above will become fully vested. For more information, see the “Pension/NQDC” column of the table below under “—Quantification of Payments and Benefits to Noble Energy’s Named Executive Officers.”

Share Ownership

As described below under “Share Ownership of Directors, Executive Officers and Certain Beneficial Owners of Noble Energy” and “The Merger—Merger Consideration—Conversion of Shares”, executive officers and non-employee directors of Noble Energy beneficially own shares of Noble Energy common stock, which will be entitled to receive the merger consideration in respect of each share of Noble Energy common stock beneficially owned by them.

Indemnification and Insurance

The merger agreement provides that the executive officers and non-employee directors of Noble Energy and its subsidiaries will have the right to indemnification and continued coverage under directors’ and officers’ liability insurance policies for at least six years following the effective time of the merger.

Post-Closing Compensation Arrangements with Chevron

Any of Noble Energy’s executive officers or non-employee directors who become officers, directors or employees or who otherwise are retained to provide services to Chevron or the surviving corporation following the effective time of the merger may enter into new individualized compensation arrangements and may participate in cash or equity incentive or other benefit plans maintained by Chevron. As of the date hereof, no compensation arrangements between such persons and Chevron and/or its affiliates have been established. However, the merger agreement provides that, for a period of one year immediately following the effective time of the merger, Chevron will continue to provide to affected employees (i.e., individuals who are employed by Noble Energy and its subsidiaries as of the effective time of the merger who remain employed with Chevron or any of its subsidiaries), which may include Noble Energy’s executive officers, for so long as such an affected employee remains employed by Chevron or any of its subsidiaries compensation and employee benefits (i) pursuant to Noble Energy’s or its subsidiaries’ compensation (including, equity incentive compensation, provided that Chevron may provide cash-based compensation in lieu of the grant date value of equity incentive compensation) and employee benefit plans, programs, policies and arrangements as provided to such employees immediately prior to the effective time of the merger, or (ii) pursuant to compensation and employee benefit plans, programs, policies or arrangements maintained by Chevron or any subsidiary of Chevron providing coverage and benefits, which, in the aggregate, are no less favorable than those provided to employees of Chevron in positions comparable to positions held by affected employees of Chevron and its subsidiaries from time to time after the effective time of the merger. For additional information, see “The Merger Agreement—Covenants and Agreements—Certain Employee Benefits Matters.”

 

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In addition, the Executive COC Plan would allow Noble Energy’s executive officers to terminate employment for Good Reason and incur a Qualifying Termination if such executive officer’s total annual compensation is reduced within two years following a change of control (which includes the merger), and such reduction constitutes a material negative change in such executive officer’s employment relationship.

Quantification of Payments and Benefits to Noble Energy’s Named Executive Officers

The information set forth below is required by Item 402(t) of Regulation S-K regarding compensation that is based on or otherwise relates to the merger that Noble Energy’s named executive officers could receive in connection with the merger. Such amounts have been calculated assuming that (i) the closing of the merger occurs on November 30, 2020, (ii) the closing price of a share of Noble Energy common stock at the effective time of the merger is $10.77 (which represents the average closing price of a share of Noble Energy common stock over the first five business days following the first public announcement of the merger), (iii) each of Noble Energy’s named executive officers experiences a Qualifying Termination immediately following the effective time of the merger, (iv) the Noble Energy PS awards will accelerate and vest based on target performance (100%), (v) the amount of Annual Cash Compensation for each of Noble Energy’s named executive officers remains unchanged from the amount determined as of the date hereof, (vi) none of Noble Energy’s named executive officers receives any additional equity-based awards following the date hereof, and (vii) each of Noble Energy’s named executive officers has properly executed any required releases and complied with all requirements (including any applicable restrictive covenants) necessary in order to receive such payments and benefits. Some of the assumptions used in the table below are based upon information not currently available and, as a result, the actual amounts to be received by any of Noble Energy’s named executive officers, if any, may materially differ from the amounts set forth below.

Golden Parachute Compensation

 

Name

   Cash(1)      Equity(2)      Pension/
NQDC(3)
     Perquisites/
Benefits(4)
     Other(5)      Total  

David L. Stover

   $ 10,333,865      $ 10,006,627        —        $ 70,327      $ 4,750,000      $ 25,160,819  

Brent J. Smolik

   $ 5,532,809      $ 5,648,781      $ 93,697      $ 61,106      $ 2,750,000      $ 14,086,393  

Kenneth M. Fisher

   $ 4,059,961      $ 2,934,149        —        $ 85,361      $ 1,500,000      $ 8,579,471  

Rachel G. Clingman

   $ 3,265,361      $ 1,838,189      $ 52,441      $ 52,221      $ 1,500,000      $ 6,708,212  

John K. Elliott

   $ 2,786,991      $ 1,845,763        —        $ 76,932      $ 2,000,000      $ 6,709,686  

 

(1)

Amounts shown reflect lump-sum cash severance payments under the Executive COC Plan, which consist of (i) the named executive officer’s Annual Cash Compensation, multiplied by (x) 2.99 for Mr. Stover or (y) 2.5 for each of the other named executive officers, and (ii) the named executive officer’s pro-rata target bonus under the STIP for the 2020 plan year through the assumed closing date of November 30, 2020. The cash severance payments are considered to be “double-trigger” payments, which means that both a change of control, such as the merger, and another event (i.e., a Qualifying Termination) must occur prior to such payments being provided to the named executive officer (see the section entitled “—Change of Control Severance Plan for Executives”). The estimated amount of each such payment is set forth in the table below:

 

Named Executive Officer

   Severance      Prorated Bonus  

David L. Stover

   $ 8,842,427      $ 1,491,438  

Brent J. Smolik

   $ 4,775,617      $ 757,192  

Kenneth M. Fisher

   $ 3,501,934      $ 558,027  

Rachel G. Clingman

   $ 2,868,868      $ 396,493  

John K. Elliott

   $ 2,442,813      $ 344,178  

 

(2)

Amounts shown reflect the sum of the potential value that each named executive officer could receive in connection with the accelerated vesting of (i) the Noble Energy RSU awards (including the payment of

 

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  accrued but unpaid dividend equivalent rights), (ii) the Noble Energy RS awards (including the payment of accrued but unpaid dividends) and (iii) the Noble Energy PS awards based on target performance of 100% (including the payment of accrued but unpaid dividend equivalent rights) (as more fully described under the section entitled “—Treatment of Noble Energy Equity-Based Awards in the Merger”). Based on the terms of the merger agreement, it is anticipated that the Noble Energy PS awards will settle at target performance but it is possible that the Noble Energy PS awards could settle based on actual performance through the effective time of the merger if actual performance is greater than target performance. Consequently, the amounts received by the named executive officers could be greater than the amounts shown if actual performance with respect to the Noble Energy PS awards through the effective time of the merger is greater than target performance. As noted above, such Noble Energy equity-based awards will not automatically accelerate upon the closing of the merger. Such Noble Energy equity-based awards are considered to be “double-trigger”, which means that both a change of control, such as the merger, and another event (i.e., a Qualifying Termination) must occur prior to such acceleration being provided to the named executive officer. The amounts shown do not include any potential value attributable to the Noble Energy stock options because all outstanding Noble Energy stock options would be out-of-the-money at the assumed closing price of $10.77 per share of Noble Energy common stock. The estimated amount of each such benefit is set forth in the table below:

 

Named Executive
Officer

   Noble Energy
RSU Awards
     Noble Energy
RS Awards
     Noble Energy
PS Awards
     Accrued but
Unpaid
Dividend
Equivalent
Rights
 

David L. Stover

   $ 1,626,636      $ 2,142,358      $ 5,807,119      $ 430,514  

Brent J. Smolik

   $ 810,066      $ 2,406,298      $ 2,211,792      $ 220,625  

Kenneth M. Fisher

   $ 453,503      $ 621,892      $ 1,725,537      $ 133,217  

Rachel G. Clingman

   $ 290,047      $ 676,076      $ 796,571      $ 75,495  

John K. Elliott

   $ 292,449      $ 392,782      $ 1,078,799      $ 81,733  

 

(3)

Amounts shown reflect the acceleration of unvested contributions under the Deferred Compensation Plan (see section entitled “Deferred Compensation Plan”). The acceleration is considered to be “single-trigger”, which means that such amounts accelerate solely due to the occurrence of a change of control, such as the merger (assuming that the named executive officer remains employed through the closing of the merger).

 

(4)

Amounts shown reflect the sum of the following benefits provided under the Executive COC Plan: (i) a lump sum payment equal to the monthly cost of continuation coverage for welfare benefit coverages (i.e., medical, dental, vision, and life insurance), less the monthly premium paid by similarly-situated active employees of Noble Energy, in each case, for 36 months for Mr. Stover and 30 months for the other named executive officers, and (ii) the maximum amount of outplacement benefits (i.e., $15,000) for each named executive officer. Such benefits are considered to be “double-trigger”, which means that both a change of control, such as the merger, and another event (i.e., a Qualifying Termination) must occur prior to such benefits being provided to the named executive officer (see the section entitled “—Change of Control Severance Plan for Executives”). The estimated amount of each such benefit is set forth in the table below:

 

Named Executive Officer

   Health,
Welfare and
Life Benefits
     Outplacement
Benefits
 

David L. Stover

   $ 55,327      $ 15,000  

Brent J. Smolik

   $ 46,106      $ 15,000  

Kenneth M. Fisher

   $ 70,361      $ 15,000  

Rachel G. Clingman

   $ 37,221      $ 15,000  

John K. Elliott

   $ 61,932      $ 15,000  

 

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(5)

Amounts shown reflect the allocation under the Pool that each named executive officer could receive in connection with the closing of the merger, subject to continued employment through such date (see the section entitled “—Retention, Recognition and Integration Pool”). A portion of the allocation is considered to be “single-trigger,” which means that such portion of the allocation becomes payable solely due to the occurrence of the merger (assuming that the named executive officer remains employed through the closing of the merger). In addition, a portion of the allocation could be considered to be “single-trigger” or “double-trigger,” as such portion of the allocation becomes payable upon the earlier to occur of (i) the date that is 90 days following the closing date of the merger, subject to the named executive officer’s continued employment through such date, or (ii) the date of the named executive officer’s Qualifying Termination.

As a condition to the receipt of the payments and benefits under the Executive COC Plan, each named executive officer will agree to comply with certain post-employment restrictive covenants, including those protecting confidential information, restricting solicitation of employees, independent contractors and certain customers of Noble Energy during the twelve month period following the termination date of such named executive officer, and restricting such named executive officer from making disparaging comments regarding Noble Energy during the twelve month period following the termination date of such named executive officer.

Share Ownership of Directors, Executive Officers and Certain Beneficial Owners of Noble Energy

Noble Energy’s Directors and Executive Officers

The following table sets forth the number of shares and percentage of Noble Energy common stock and common units of NBLX beneficially owned by Noble Energy’s named executive officers, each of its directors, and all of its executive officers and directors as a group as of August 4, 2020, the most recent practicable date for which such information was available. None of the securities beneficially owned as set forth below is pledged as security.

 

Name

  Noble Energy, Inc.
Common Stock Beneficially Owned(1)
    Noble Midstream
Partners LP(1)
 
  Number of
Shares(2)
    Shares
Underlying
Stock
Options(3)
    Total     Percent of
Class(4)
    Number of
Common
Units
Beneficially
Owned
    Percentage
of Common
Units
Beneficially
Owned(5)
 

Jeffrey L. Berenson

    77,325       42,140       119,465       *       —         —    

James E. Craddock

    103,461       29,391       132,852       *       —         —    

Barbara J. Duganier

    25,899       —         25,899       *       —         —    

Thomas J. Edelman

    3,338,400 (6)      42,140       3,380,540       *       —         —    

Holli C. Ladhani

    40,906       —         40,906       *       —         —    

David L. Stover

    711,153       1,098,706       1,809,859       *       4,500       *  

Scott D. Urban

    73,234       42,140       115,374       *       —         —    

William T. Van Kleef

    125,352       42,140       167,492       *       —         —    

Martha B. Wyrsch

    21,464       —         21,464       *       —         —    

Named Executive Officer (excluding any director named above)

           

Brent J. Smolik

    285,018       66,112       351,130       *       7,500       *  

Kenneth M. Fisher

    170,864       439,256       610,120       *       15,500       *  

Rachel G. Clingman

    85,457       41,627       127,084       *       —         —    

John K. Elliott

    101,514       197,760       299,274       *       —         —    

All directors and executive officers as a group (17 persons)

    5,358,310       332,781       7,691,091       1.59     39,160       *  

 

*

Represents less than one percent.

 

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(1)

Unless otherwise indicated, all shares and units are directly held with sole voting and investment power.

(2)

Includes shares subject to restricted stock awards that are not currently vested, as follows: 10,116 shares held by each of Messrs. Berenson, Craddock, Edelman, Urban, Van Kleef, Ms. Duganier and Ms. Ladhani and 21,464 shares held by Ms. Wyrsch; Mr. Stover—198,919 shares; Mr. Smolik—223,426 shares; Mr. Fisher—57,743 shares; Ms. Clingman—62,774 shares; Mr. Elliott—36,470 shares; and other executive officers—98,416 shares.

(3)

Consists of shares not outstanding but subject to options that are currently exercisable or that will become exercisable on or before October 4, 2020.

(4)

Based on 484,718,868 shares of Noble Energy common stock outstanding as of August 4, 2020.

(5)

Based on 90,362,416 common units of Noble Midstream outstanding as of August 4, 2020.

(6)

Includes 20,000 shares held by spouse; 80,000 shares held by trusts; and 60,000 shares held by business ventures.

Certain Beneficial Owners of Noble Energy Common Stock

The following table shows certain information regarding the beneficial ownership of Noble Energy common stock as of August 4, 2020, the most recent practicable date for which such information was available, by each person who is known by Noble Energy to beneficially own more than five percent of the outstanding Noble Energy common stock.

As of August 4, 2020, 484,718,868 shares of Noble Energy common stock were outstanding.

 

Name and Address of Beneficial Owner

   Number of Shares of Common
Stock Beneficially Owned
    Percent of
Class(1)
 

Capital International Investors

    

333 South Hope Street

    

Los Angeles, CA 90071

     55,603,844 (2)      11.5

The Vanguard Group

    

100 Vanguard Blvd.

    

Malvern, PA 19355

     54,324,077 (3)      11.2

Capital Research Global Investors

    

333 South Hope Street

    

Los Angeles, CA 90071

     44,012,968 (4)      9.1

BlackRock, Inc.

    

55 East 52nd Street

    

New York, NY 10055

     32,929,847 (5)      6.8

State Street Corporation

    

One Lincoln Street

    

Boston, MA 02111

     24,851,616 (6)      5.1

 

(1)

Based on 484,718,868 shares of Noble Energy common stock outstanding as of August 4, 2020

(2)

Based upon its Schedule 13G/A filed with the SEC on February 14, 2020 with respect to its beneficial ownership of Noble Energy’s common stock, Capital International Investors has sole voting power with respect to 55,603,752 shares and sole dispositive power with respect to 55,603,844 shares. Beneficial ownership of these shares is disclaimed. Capital International Investors is a division of Capital Research and Management Company.

(3)

Based upon its Schedule 13G/A filed with the SEC on February 12, 2020 with respect to its beneficial ownership of Noble Energy’s common stock, The Vanguard Group has sole voting power with respect to 694,426 shares, shared voting power with respect to 133,362 shares, sole dispositive power with respect to 53,528,780 shares and shared dispositive power with respect to 795,297 shares.

(4)

Based upon its Schedule 13G/A filed with the SEC on February 14, 2020 with respect to its beneficial ownership of Noble Energy’s common stock, Capital Research Global Investors has sole voting power with respect to 44,011,787 shares and sole dispositive power with respect to 44,012,968 shares. Beneficial

 

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  ownership of these shares is disclaimed. Capital Research Global Investors is a division of Capital Research and Management Company.
(5)

Based upon its Schedule 13G/A filed with the SEC on February 5, 2020 with respect to its beneficial ownership of Noble Energy’s common stock, BlackRock, Inc. has sole voting power with respect to 28,530,665 shares and sole dispositive power with respect to 32,929,847 shares.

(6)

Based upon its Schedule 13G filed with the SEC on February 14, 2020 with respect to its beneficial ownership of Noble Energy’s common stock, State Street Corporation has sole voting power with respect to 0 shares, shared voting power with respect to 22,847,197 shares, sole dispositive power with respect to 0 shares and shared dispositive power with respect to 24,819,965 shares.

Director and Officer Indemnification

Under the merger agreement, certain indemnification and insurance rights exist in favor of Noble Energy and its subsidiaries’ current and former directors and officers. For more information about these rights, see “The Merger—Interests of Directors and Executive Officers of Noble Energy in the Merger—Indemnification and Insurance” beginning on page [    ].

Accounting Treatment of the Merger

In accordance with current accounting guidance, the merger will be accounted for using the acquisition method. As a result, the recorded assets and liabilities of Chevron will be carried forward at their recorded amounts, the historical operating results will be unchanged for the prior periods being reported on and the assets and liabilities of Noble Energy will be adjusted to their respective estimated fair values at the closing date of the merger. In addition, all identified intangible assets will be recorded at estimated fair value and included as part of the net assets acquired. Any excess of the purchase price, consisting of the number of shares of Chevron common stock to be issued to former Noble Energy stockholders, option holders and holders of restricted stock units awards, performance share awards or restricted stock awards, as applicable, at fair value, over the fair value of the net assets acquired including identified intangible assets of Noble Energy on the closing date of the merger will be accounted for as goodwill. In accordance with current accounting guidance, goodwill will not be amortized but will be evaluated for impairment annually. Identified finite life intangible assets will be amortized over their estimated lives. Further, the acquisition method of accounting will result in the operating results of Noble Energy being included in the operating results of Chevron beginning from the closing date of the merger.

Regulatory Approvals Required for the Merger

Chevron and Noble Energy are not currently aware of any other material governmental consents, approvals or filings that are required prior to the parties’ completion of the transaction other than those described below. If additional approvals, consents and filings are required to complete the transaction, Chevron and Noble Energy intend to seek such consents and approvals and make such filings.

Chevron and Noble Energy expect to complete the transaction in the fourth quarter of 2020. Although Chevron and Noble Energy believe that they will receive the required consents and approvals described below to complete the transaction, neither can give any assurance as to the timing of these consents and approvals or as to Chevron’s and Noble Energy’s ultimate ability to obtain such consents or approvals (or any additional consents or approvals which may otherwise become necessary) or that such consents or approvals will be obtained on terms and subject to conditions satisfactory to Chevron and Noble Energy. The receipt of the regulatory approvals (as described hereinafter) is a condition to the obligation of each of Chevron and Noble Energy to complete the merger.

The merger is subject to the requirements of the HSR Act and the related rules and regulations, which provide that certain transactions may not be completed until notification and report forms have been furnished to the DOJ and the FTC and until certain waiting periods have been terminated or have expired. The HSR Act

 

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requires Chevron and Noble Energy to observe a 30-calendar-day waiting period after the submission of their respective HSR filings before consummating their transaction, unless the waiting period is earlier terminated. If either agency issues a request for additional information or documentary material (a “Second Request”) prior to the expiration of the initial waiting period, the parties must observe a second 30-calendar-day waiting period, which begins to run only after each of the parties has substantially complied with the Second Request.

On August 3, 2020, Chevron and Noble Energy each filed a notification and report form under the HSR Act with the DOJ and the FTC, which filings started the initial 30-calendar-day waiting period required by the HSR Act.

Completion of the merger is further subject to any applicable waiting period, clearance or affirmative approval from certain foreign regulators being obtained and any mandatory waiting period thereto having expired.

Treatment of Existing Debt

In connection with the merger, Chevron currently expects to terminate Noble Energy’s existing revolving credit facility, but to maintain Noble Midstream’s existing revolving credit facilities and term loan credit facilities. Following the merger, Chevron currently expects to leave outstanding approximately $5.9 billion aggregate principal amount of Noble Energy’s outstanding long-term debt, excluding finance lease obligations, as well as approximately $1.6 billion aggregate principal amount of Noble Midstream’s outstanding long-term debt, excluding finance lease obligations.

Treatment of Noble Energy Stock Options and Other Stock-Based Awards

Noble Energy Stock Options. Upon completion of the merger, each outstanding Noble Energy stock option will be converted into an option to acquire, on the same terms and conditions as were applicable under such Noble Energy stock option immediately prior to the completion of the merger (including any provisions for acceleration), the number (rounded down to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy stock option immediately prior to the completion of the merger by (ii) the merger consideration.

The exercise price per share of Chevron common stock subject to any such converted Noble Energy stock option at and after completion of the merger will be an amount (rounded up to the nearest one hundredth of a cent) equal to (i) the exercise price per share of Noble Energy common stock subject to such Noble Energy stock option immediately prior to the completion of the merger divided by (ii) the merger consideration.

Noble Energy RSU Awards. Upon completion of the merger, each outstanding Noble Energy RSU award will be converted into a Chevron RSU award on the same terms and conditions as were applicable under such Noble Energy RSU award immediately prior to the completion of the merger (including any provisions for acceleration), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy RSU award immediately prior to the completion of the merger by (ii) the merger consideration.

Noble Energy RS Awards. Upon completion of the merger, each outstanding Noble Energy RS award will be converted into an award, on the same terms and conditions as were applicable under such Noble Energy RS award immediately prior to the completion of the merger (including any provisions for acceleration), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy RS award immediately prior to the completion of the merger by (ii) the merger consideration.

Noble Energy PS Awards. Upon completion of the merger, each outstanding Noble Energy PS award, will be converted into an award, on the same terms and conditions as were applicable under such Noble Energy PS

 

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award immediately prior to the completion of the merger (other than any performance-based vesting conditions), with respect to the number (rounded to the nearest whole number) of shares of Chevron common stock determined by multiplying (i) the number of shares of Noble Energy common stock subject to such Noble Energy PS award (assuming that any performance-based vesting conditions applicable to such Noble Energy PS award for any performance period that has not been completed as of the effective time of the merger are achieved at the greater of “target” performance or actual performance as of the effective time of the merger) by (ii) the merger consideration.

Any amounts relating to dividend equivalent rights, if any, granted with respect to the foregoing Noble Energy equity awards that are accrued but unpaid as of the completion of the merger will carry over and will be paid if required by and in accordance with the terms and conditions as were applicable to such equity award immediately prior to the completion of the merger.

For additional information on Noble Energy’s stock-based awards, see “The Merger—Interests of Directors and Executive Officers of Noble Energy in the Merger” beginning on page [    ].

No Appraisal Rights

Noble Energy stockholders are not entitled to appraisal rights in connection with the merger.

Appraisal rights are statutory rights that enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the transaction.

Holders of shares of Noble Energy common stock will not have rights to an appraisal of the fair value of their shares. Under the DGCL, appraisal rights are not available for the shares of any class or series if the shares of the class or series are listed on a national securities exchange or held of record by more than 2,000 holders on the record date, unless the stockholders receive in exchange for their shares anything other than shares of stock of the surviving or resulting corporation or of any other corporation that is publicly listed or held by more than 2,000 holders of record, cash in lieu of fractional shares or fractional depositary receipts or any combination of the foregoing. Shares of Noble Energy common stock are listed on Nasdaq as of the record date, and Noble Energy stockholders will receive Chevron common stock pursuant to the merger agreement and cash in lieu of fractional shares. Approval for the listing of the shares of Chevron common stock on the NYSE is a condition to completion of the merger.

NYSE Listing of Chevron Common Stock; Delisting and Deregistration of Noble Energy Common Stock

Prior to the completion of the merger, Chevron has agreed to take all necessary action to cause the shares of Chevron common stock to be issued in connection with the merger to be approved for listing on the NYSE subject to official notice of issuance. The listing on the NYSE of the shares of Chevron common stock to be issued in connection with the merger is also a condition to completion of the merger.

Prior to the effective time of the merger, Noble Energy will cooperate with Chevron and use its reasonable best efforts to take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable on its part pursuant to applicable law and the rules and regulations of the NYSE or Nasdaq to cause (a) the delisting of Noble Energy common stock from Nasdaq as promptly as practicable after the effective time of the merger and (b) the deregistration of Noble Energy common stock pursuant to the Exchange Act as promptly as practicable after such delisting. If the merger is completed, Noble Energy common stock will cease to be listed on Nasdaq and Noble Energy common stock will be deregistered under the Exchange Act, after which Noble Energy will no longer be required under SEC rules and regulations to file periodic reports with the SEC in respect of Noble Energy common stock.

 

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Material U.S. Federal Income Tax Consequences

The following is a general discussion of the material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) of Noble Energy common stock that exchange their Noble Energy common stock for Chevron common stock in the merger.

This discussion is based upon the Code, its legislative history, U.S. Treasury regulations promulgated under the Code and court and administrative rulings and decisions, all as in effect on the date of this proxy statement/prospectus. These authorities may change, possibly retroactively, or be subject to differing interpretations, and any such change or differing interpretation could affect the accuracy of the statements and conclusions set forth in this discussion.

This discussion addresses only those U.S. holders (as defined below) of Noble Energy common stock that hold their Noble Energy common stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion is not a complete description of all of the U.S. federal income tax consequences of the merger and, in particular, does not address any tax consequences arising under the unearned income Medicare contribution tax enacted pursuant to the Health Care and Education Reconciliation Act of 2010, nor does it address any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction, or under any U.S. federal laws other than those pertaining to the income tax. Further, this discussion does not address all aspects of U.S. federal income taxation that may be relevant to you in light of your individual circumstances or that may be applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are:

 

   

a bank, thrift, mutual fund, or other financial institution;

 

   

a tax-exempt organization or government organization;

 

   

a real estate investment trust or real estate mortgage investment conduit;

 

   

a partnership, S corporation or other pass-through entity (or an investor in a partnership, S corporation or other pass-through entity);

 

   

an insurance company;

 

   

a regulated investment company or a mutual fund;

 

   

a dealer or broker in stocks and securities, or currencies;

 

   

a trader in securities that elects mark-to-market treatment;

 

   

a holder of shares of Noble Energy common stock subject to the alternative minimum tax provisions of the Code;

 

   

a holder of shares of Noble Energy common stock that received Noble Energy common stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;

 

   

a holder of shares of Noble Energy common stock that has a functional currency other than the U.S. dollar;

 

   

a holder of shares of Noble Energy common stock that is required to accelerate the recognition of any item of gross income with respect to Noble Energy common stock as a result of such income being recognized on an applicable financial statement;

 

   

a holder of shares of Noble Energy common stock that holds Noble Energy common stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; or

 

   

certain former citizens or long-term residents of the United States.

 

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For purposes of this discussion, the term “U.S. holder” means a beneficial owner of shares of Noble Energy common stock that is, for U.S. federal income tax purposes, (1) an individual who is a citizen or resident of the United States, (2) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia, (3) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes, or (4) an estate the income of which is subject to U.S. federal income taxation regardless of its source.

If an entity or an arrangement treated as a partnership for U.S. federal income tax purposes holds shares of Noble Energy common stock, the U.S. federal income tax consequences to a partner in such partnership (or owner of such entity) generally will depend on the status of the partner and the activities of the partnership (or entity). Any entity or arrangement treated as a partnership for U.S. federal income tax purposes that holds shares of Noble Energy common stock, and any persons that, for U.S. federal income tax purposes, are treated as partners in such partnership, should consult their own tax advisors with respect to the tax consequences of the merger in their specific circumstances.

The tax consequences of the merger may be complex and will depend on your specific situation and factors not within Chevron’s or Noble Energy’s control. You should consult your own tax advisor as to the tax consequences of the merger in your particular circumstances, including the applicability and effect of the alternative minimum tax and any U.S. federal, U.S. state or local, non-U.S. or other tax laws and of changes in such laws.

Tax Consequences of the Merger

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and Chevron and Noble Energy intend to report the merger consistent with such qualification. Such treatment depends, in part, upon the conclusion that the Debentures constitute indebtedness, and not equity, for U.S. federal income tax purposes. Noble Energy believes that under current law the Debentures constitute indebtedness for U.S. federal income tax purposes, has consistently reported the Debentures as indebtedness for U.S. federal income tax purposes on its U.S. federal income tax returns and has otherwise treated the Debentures consistently with such characterization. The matter is not, however, free from doubt, and there is no controlling authority on the question. If the IRS were successfully to assert that the Debentures constitute equity rather than indebtedness for U.S. federal income tax purposes, the merger would generally be treated as a taxable transaction in which U.S. holders of Noble Energy common stock would recognize gain or loss for U.S. federal income tax purposes. Noble Energy and Chevron have not sought, and will not seek, any ruling from the IRS regarding any matters relating to the merger, and as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below. As provided in the merger agreement, none of Chevron, Noble Energy or any subsidiary of either will have any liability to any Noble Energy stockholder should the merger fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes.

Tax Consequences if the Merger Qualifies as a “Reorganization” Described in Section 368(a) of the Code

The merger is intended to qualify as a “reorganization” described in Section 368(a) of the Code for U.S. federal income tax purposes. Assuming that the merger is so treated, the material U.S. federal income tax consequences of the merger to U.S. holders of Noble Energy common stock will be as follows:

 

   

A U.S. holder generally will not recognize any gain or loss, and no amount will be includible in the income of such U.S. holder, as a result of the receipt of Chevron common stock in the merger (except for any gain recognized with respect to cash received in lieu of a fractional share of Chevron common stock, as described below).

 

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The aggregate tax basis of the Chevron common stock received by a U.S. holder in the merger (including any fractional share of Chevron common stock deemed received and exchanged for cash, as discussed below) will equal the aggregate adjusted tax basis of such U.S. holder’s Noble Energy common stock exchanged therefor.

 

   

A U.S. holder’s holding period in the Chevron common stock received in exchange for shares of Noble Energy common stock (including a fractional share of Chevron common stock deemed to be received and exchanged for cash, as discussed below) will include the holding period of the shares of Noble Energy common stock exchanged for such Chevron common stock.

If a U.S. holder of Noble Energy common stock acquired different blocks of Noble Energy common stock at different times or at different prices, such U.S. holder’s basis and holding period in its shares of Chevron common stock may be determined separately with reference to each block of Noble Energy common stock. Any such U.S. holder should consult its tax advisor regarding the holding periods of the particular shares of Chevron common stock received in the merger.

A U.S. holder who receives cash instead of a fractional share of Chevron common stock generally will be treated as having received such fractional share pursuant to the merger, and then as having sold such fractional share for cash. Gain or loss generally will be recognized based on the difference between the amount of such cash received and the portion of the U.S. holder’s aggregate adjusted tax basis of its Noble Energy common stock surrendered that is allocable to the fractional share of Chevron common stock. Such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the U.S. holder’s holding period in the fractional share of Chevron common stock deemed to be received exceeds one year at the effective time of the merger. The deductibility of capital losses is subject to limitation.

A U.S. holder may be required to retain records related to such holder’s Noble Energy common stock and file with its U.S. federal income tax return for the taxable year that includes the merger a statement setting forth certain facts relating to the merger.

Tax Consequences if the Merger Does Not Qualify as a “Reorganization” Described in Section 368(a) of the Code

If the merger does not qualify as a “reorganization” described in Section 368(a) of the Code for U.S. federal income tax purposes, then a U.S. holder of shares of Noble Energy common stock that exchanges such shares of Noble Energy common stock for Chevron common stock generally will recognize gain or loss on its receipt of Chevron common stock equal to the difference, if any, between (i) the sum of the fair market value of the shares of Chevron common stock actually received by such U.S. holder and the amount of any cash received in lieu of a fractional share of Chevron common stock and (ii) such U.S. holder’s adjusted tax basis in the Noble Energy common stock exchanged therefor. Gain or loss must be calculated separately for each block of Noble Energy common stock exchanged by such U.S. holder if such blocks were acquired at different times or for different prices. Any gain or loss so recognized will be long-term capital gain or loss if the U.S. holder’s holding period in a particular block of Noble Energy common stock exceeds one year at the effective time of the merger. A U.S. holder’s aggregate tax basis in the Chevron common stock received in the merger will equal the fair market value of such shares of Chevron common stock as of the effective time of the merger, and the holding period of such Chevron common stock will begin on the date after the merger.

Backup Withholding

If you are a non-corporate holder of Noble Energy common stock you may be subject, under certain circumstances, to backup withholding (currently at a rate of 24%) on any cash payments you receive in the merger. You generally will not be subject to backup withholding if you:

 

   

furnish a correct taxpayer identification number, certify that you are not subject to backup withholding on the IRS Form W-9 or successor form (or appropriate substitute) included in the election form/letter

 

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of transmittal you will receive and otherwise comply with all the applicable requirements of the backup withholding rules; or

 

   

provide proof acceptable to Chevron or the exchange agent, as applicable, that you are otherwise exempt from