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
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,
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