Speaker 1:                          
This episode of EnergyCents is brought to you by S&P Global's Financial and Capital Markets Energy Advisory Group. Our team of experts provides the investment community with actionable insight and integrated thought leadership that identify the trends and trend-makers of global energy markets. Solutions cover the full energy and natural resources sector from traditional fossil fuels to emerging clean tech ideas and supply chains and are available via recurring reports, webinars, robust data sets, [00:00:30] and personal engagements with experts.

Hill Vaden:
All right, welcome back to EnergyCents, an S&P Global podcast devoted to topics that relate to the intersection of energy and financial sectors. This is Hill Vaden, co-hosting this week with Breanne Dougherty, and our guests experts are Justin Jacobs, Raoul LeBlanc, and Hassan Eltorie. Hey, guys, and welcome.

Breanne Dougher...:      
Hey, Hill.

Raoul LeBlanc:                  
Hey, thanks.

Hassan Eltorie:                 
All right.

Hill Vaden:                         
This week, just on Monday, Chevron announced that it would acquire Noble Energy in a $5 billion all-stock deal valuing [00:01:00] the company Noble at about $10.38 a share. This announcement comes about 15 months, Breanne, after Chevron's $33 billion bid for Anadarko, which was later bested by Occidental.
Breanne Dougher...:    

  
Yeah. Let's be honest. It's a pretty interesting deal and a different year. How drastically different indeed, right? So Chevron with this, back on the Anadarko deal, was placing about a 39% premium on those Anadarko shares, and that was just 15 months ago. Naturally, when we look at what [00:01:30] this deal came out the other day, we're looking at more of an 8% premium on these Noble shares, so a significant shift, I would say.

And I guess Chevron here has been rewarded for its patience because, when we think about it, this deal, in many ways, does the same thing Anadarko would in the sense that it does increase some exposure to new plays, and very importantly, it increases some exposure to some new finds and some good monetization capabilities from a global gas scenario. [00:02:00] So there's a lot to be said about the deal

in general. Hassan, I'm going to go to you first here. Before we get into the nitty-gritty details of exactly what the deal consisted of, what do you think that this signals for the upstream M&A market going forward? Do you think it does signal anything, or it's just a one-off?

Hassan Eltorie:                 
Yeah. So in our opinion, we've seen a lot of the media out there say this is the beginning of a splurge in M&A activity across the industry. We really don't think so. We have not seen any material [00:02:30] change in the governing dynamics in the market today that makes us believe that M&A activity is going to start, and here's why. There's still a lot of uncertainty in the markets, especially when it comes to commodity prices. We still have a global pandemic that makes it very difficult to go out there and do due diligence on certain assets. More importantly, I think one factor that everybody hasn't really focused on is the capital markets remain relatively tepid. Whether it's the debt markets or the equity markets out there, to go and raise capital [00:03:00] is still pretty difficult. So we don't see any of these factors actually change materially to justify that we're going to see a lot of M&A activity.
Over and above that, the potential acquirers out there, the bigger companies, one thing that we're seeing is a lot of them have a ton of debt on their books. And a lot of companies' balance sheets aren't as strong as they are. And not only is the acquirer's balance sheet usually not as strong, but even the targets. A lot of companies out there have to justify when [00:03:30] they buy a company, assuming a lot of their debt. Again, with capital markets being tight, refinancing that debt is going to be difficult. So none of these factors have changed materially for us to get excited about the M&A market.
Further, you've got to look a little deeper into the Chevron-Noble deal. Chevron's enterprise value is somewhere around $190, $200 billion, and they acquired Noble for about $14 billion. So like, I think, Raoul said the other day, think about it more as a bolt-on acquisition than a big company [00:04:00] acquisition. I think that that tells you something. Noble is not of the size of Anadarko. Anadarko is a lot bigger, and they were able to reward themselves by being patient and buy something a lot smaller for a lot cheaper.

Breanne Dougher...:      
So maybe not more corporate M&A, let's say. But do we think asset-wise there could be a resurgence within the M&A market, or we still think, in general, across both the asset and the corporate deals, it's going to be a slow year?

Hassan Eltorie:                 
No, we think it's going to be a slow year. That's an interesting [00:04:30] question when you think about assets. I mean, the amount of assets that are on the market, there are quite a bit, but the quality is very varied, right? And I would argue that there are very few opportunities out there with high-quality assets on the market to be sold because basically if you have high-quality assets, you probably want to hold on to them to make it through this commodity downturn. You don't want to get rid of them. So we might see some asset acquisitions done via bankruptcies. We think that might happen a little bit. But by no means do we expect any [00:05:00] significant increase in activity there either.

Raoul LeBlanc:                  
I think you're right.Breanne Dougher...:      
Yeah, I was going to say... Sorry, go ahead.

Raoul LeBlanc:                  
Just to add to that, that makes sense to me. Look, the bid ask has been pretty wide, okay? We know that because of all the volatility in the price, right? In general, volatility inhibits deals. So we've got that going on. At the same time, the suffering, particularly as the oil prices bounce back to 40, the suffering has not been enough to drive people to a level of desperation to do forced deals yet. That may be coming, but [00:05:30] not. Instead, now I can agree with Hassan that waiting through the bankruptcy cycle to some degree, which will take a little time, but it's happening. And it's tough to get deals done. One question I had for the whole team: were you guys a little surprised about the price?

Hassan Eltorie:                 
Well, I wasn't too much because it was exactly almost spot on to our $11 valuation of Noble that we published a couple of months ago. So we were right there on the price. I think Wall Street was a lot more generous in its valuation of Noble. I think the median consensus price [00:06:00] target was $13. So we were a lot closer, I think, to reality and to what Chevron paid. So I think it's pretty much spot on.

Raoul LeBlanc:                  
Well, I know it's spot on, but did you think that Noble would go for that? I mean, people, when they get bought out, they generally are looking for a pretty big premium.

Hassan Eltorie:                 
Good question. Good question. So Noble is trading... Their 52-week high is about 24, 25 bucks, something like that, right? And they've been taken out at a significantly lower price. The premium on this deal to the Friday closing price [00:06:30] is 7.5%, right? It's truly low. So, we won't be too surprised if there's some rejection from it, but think about this. This is an all-stock deal. You get access to Chevron stock, which has a pretty decent dividend yield on it, and you maintain all the upside to any share price appreciation that comes with Chevron, which is a bigger, more diversified company, a better balance sheet, better assets. So I think Noble shareholders are likely to approve the deal and go forward.

Hill Vaden:                         
[00:07:00] Justin, I mean, the all-stock deal, you and I were talking earlier in the day. Even if there's not a wave of consolidation or M&A on the back of this, does all-stock seem to be a way forward at least in the immediate term with upstream transactions, which are otherwise somewhat hard to get through?

Justin Jacobs:                    
Yeah. I think it's a pretty attractive option in this environment for the reasons that Hassan just mentioned. And also, on the buyer's side, capital markets are pretty much closed, and it's tough for companies to go [00:07:30] out and raise debt to do these kind of deals. So yeah, using stock is an attractive option. It's not necessarily going to be an option for all companies because you have Chevron issuing new shares to kind of finance it in a way. And with equity markets closed to a lot of E&Ps, that's not necessarily an option. But for a bigger company that can do it, yeah, I think it's an attractive way to structure a deal like this maybe.

Breanne Dougher...:      
And what about for [00:08:00] the Chevron shareholders? We've talked a little bit what it means for Noble. What do we think? All signs point to yes, that everybody thinks Chevron got itself a great deal, and it's good to go? Or is there any other thinking from the Chevron side?

Raoul LeBlanc:                  
Well, what interests me is, first of all, I don't think this deal was necessarily a surprise. After Chevron went after Anadarko, if you looked across Wall Street and said, "Oh, this is the type of company they're looking for," everybody and their grandmother said, "Hey, Noble [00:08:30] looks a lot like a smaller version of Anadarko." Right? A big gas project internationally, assets in the Permian and the D-J Basin, offshore presence. So I think it was a natural fit and not surprising.
And from my understanding, it fills a niche in Chevron's portfolio in terms of that international gas lot, which gives them a near-term growth on the international gas side. They've gotten [00:09:00] very heavily into Australia. We know that. They've got several big assets. Australia. Kazakhstan is, of course, a gigantic asset. The Permian's a gigantic asset. It gives them a new area with some near-term growth that's kind of already paid for, and it's now just kind of cash flow that they can harvest.

Breanne Dougher...:      
And were they hurting for growth already? I mean, they needed some growth, right? They needed something in the books that was going to give them that growth, I think.

Hassan Eltorie:                 
Yeah. I definitely agree with what Raoul was saying that... I mean, [00:09:30] you can draw a pretty straight line between the logic underlying Chevron's acquisition of Anadarko with Noble, right? It's just a smaller version. Bear in mind, there are a couple of small differences. If you look at Mozambique, they haven't reached FID yet on the Anadarko side. But with Noble, like Raoul was saying, it's already cash paid for. Pretty much the assets are up and running. The other thing which is... Anadarko had a lot bigger Permian acreage position that I think Chevron would have liked [00:10:00] to leverage at a lot higher oil price that doesn't exist today. Noble's acreage is probably about 90,000, which puts pretty much Anadarko's premium at three times its size. So it won't be able to leverage as much synergies in the Permian as it would have liked with Anadarko.

Breanne Dougher...:      
So what do we think... Do we even want to tie a single theme or a single asset to what was really the driver behind this deal? We've talked, obviously, the D-J basin is a big part of it. And the global gas, obviously the Eastern Mediterranean piece [00:10:30] is a big part of. Was one more of a driver than the other, or do you think it's a nice balance?

Hassan Eltorie:                 
Honestly, it's the global gas that really does the deal, at least in my view. I don't know what everybody else thinks. But the onshore U.S. will not move the needle that much for Chevron, not in terms of synergies or production growth. It really doesn't do much. It's really exposure to the global gas that, I think, makes the biggest difference.
One thing we failed to mention, Noble used to have significant offshore, deep-water Gulf of Mexico assets that would have made it almost [00:11:00] identical to Anadarko. They sold those off a couple of years ago. But generally speaking, yeah, this deal is all about the global gas, in my opinion.

Raoul LeBlanc:
Yeah. In terms of the U.S. assets, I would say, "Okay." U.S. assets are, they're good. They're not great, though. Certainly, their performance in central Reeves is an area that has mixed results, and they have mixed results right in there with them. Some fantastic wells, but also a number of poor wells. So it's not as [00:11:30] if this is a premium asset in the Permian. And I think they paid a price that was not premium, so that's worth it.
The D-J is a nice little asset. I continue to feel like the Wattenberg Field in Weld County, Colorado, is the gift that keeps on giving, but it's not free. You still have to get out there, spend money, drill, and it has relatively high decline rates. And we have not seen an increase in well productivity in the Wattenberg play in the same way that we have in [00:12:00] other areas. Increases in efficiency, yes. Increases in actual reserves and extraction per lateral foot, no, really not for years.
So it's a great resource and keeps giving, but it's not exactly going to set the world on fire, and I'll be interested to see whether they move that into harvest mode. Certainly, from the data we showed in our piece yesterday, Noble was not really focused on the Permian. [00:12:30] They were much more focused in their activity level on drilling in the D-J Basin and Wattenberg Field.

Hassan Eltorie:                 
Yeah. And I don't think we have to spend a lot of time talking about Eagle Ford because that really wasn't a great asset either for them.

Raoul LeBlanc:                  
No, it's not. I mean, that's right next to Anadarko's position, right? It was right there. Actually, that was a great asset, okay? It no longer is. It's a little long in the tooth. I think you can say the same thing with [00:13:00] their Utica position, which was okay. Again, a set of solid assets, but nothing really to set the world on fire.

Justin Jacobs:                    
Do you think they'll try to sell those Eagle Ford assets or any of those?

Raoul LeBlanc:                  
I would not be surprised if they decided to sell those. I just think they're relatively marginal and don't have any synergies with that. Either that or they just harvest them. Either way, I think they'd try to minimize it as [00:13:30] a sink for capital or an area that takes up a lot of manpower in their portfolio.

Breanne Dougher...:      
In this price environment, though, I imagine that they're not going to be too quick to hive off anything frantically.

Raoul LeBlanc:                  
Right. Well, that's the thing about Chevron. You don't have to do anything, right?

Breanne Dougher...:      
Yeah.

Raoul LeBlanc:                  
Yeah. You're not in the same position as, say, an Oxy that just did a very big deal and then-

Breanne Dougher...:      
Had to. Yeah.

Raoul LeBlanc:                  
... the floor falls away from underneath it.

Breanne Dougher...:      
Now, do you think... Is there anything that... I mean, [00:14:00] naturally this is a big enough purchase for them to have come through within 2020, but do you think that this points to a strategy with Chevron where there might be some other bolt-ons, be they assets maybe more than another corporate, for instance? But is there anything else that you think would round out Chevron's portfolio even more, given that this points to a bit of a direction for them?

Hassan Eltorie:                 
Yeah. I can make a quick comment on that. Basically, Chevron was on the prowl for a deal. We all know that, partly because it's got a really strong balance sheet. Obviously, they take on a little bit of debt [00:14:30] with Noble, but nothing too big. But keep in mind, they went after a smaller company on the cheap that doesn't really impact or change the portfolio drastically. So they played it safe in this environment, and I don't expect them to do another deal for at least 12 to 24 months. They could have gone out after a bigger fish, but they decided to go for a smaller company. There's a good reason behind that. I think that tells you a lot about the risk-reward profile that they're trying to take.

Breanne Dougher...:      
And I know you've already said that you think it's going to be a slower year, but do you think there [00:15:00] are actually even any majors or NOCs or anybody to that effect that might be on the prowl a little bit?

Hassan Eltorie:                 
We were just looking at that. And in our report, one thing we wanted to highlight is putting on everybody's debt-to-cap and leverage ratios just to show, and pretty much almost everybody has quite a bit of debt on their books. So keep that in mind. That's a hindrance to any acquisition. The closest company in terms of leveraging metrics to Chevron is Exxon, but Exxon is running significant cash-flow deficits this year. So it's kind [00:15:30] of unlikely that they'd go ahead and do an acquisition either.

Breanne Dougher...:      
Do you think-

Raoul LeBlanc:                  
And by the way, you can bet that the Chevron team... Of course, they look at all opportunities. But you can bet they took a look at Oxy because as we've been noting... It was water cooler around all offices in Houston. The water cooler talk has been, "Yeah, Chevron's going to come back and buy Oxy for less than Oxy paid for Anadarko." It didn't happen. But obviously, I'm sure they [00:16:00] took a look at that.

Hassan Eltorie:                 
Yeah. They probably said, "You know what? With all that debt, I'm all right. Thanks."

Justin Jacobs:                    
The Warren Buffet deal in there that they didn't want any part of.

Breanne Dougher...:      
Exactly. No, I mean, I might be a little bit biased because, as you all know and maybe lots of listeners already know, I tend to live mostly within the natural gas world, but I feel like a lot of the big deals that have been coming out as of late do have a very big gas component to them. Is that [00:16:30] fair? Do we think this is at least... If we're trying to look at where there might be some trends or some tipping points here, do we think that it looks like gas is falling increasingly into favor, particularly with these NOCs and majors, or these are just isolated events?

Raoul LeBlanc:                  
I don't know, Breanne. It's a good point. I mean, we've got this scenario laid out, and as we've been presenting that to people, I think people have been genuinely interested in it. Yeah. I don't think that it's [00:17:00] got enough of a consensus to drive any kind of deal at this point. So it could be that these companies... And by the way, this applies to the Chesapeakes of the world and other companies that have been having some difficulties, or the Oxy's. If there is gas uplift, Chevron would be very happy that they got this, because between the Eagle Ford and the Utica [00:17:30] and even that Permian position and the D-J, they have relatively decent gas exposure to this, right? So if our forecast turns out to be on the right side of reality, then it could be a really nice option value. Were they thinking option value? They might've been thinking option value. Okay?
But I think the gas market has been so consistently difficult for so long that it'd be very hard to convince [00:18:00] a management team, an executive management team, to take a big chance... This wouldn't be a big chance, but to take a chance on a gas-oriented asset. I think there is some money out there that's going for that and buying into this. But I don't think it happens at this corporate M&A level for a $5 billion transaction. That's my view.

Breanne Dougher...:      
Do you think here in North America, but what... Is that North America focused, do you think? Or what about global LNG?

Raoul LeBlanc:                  
Again, I think most of this is not LNG, by the way. It's [00:18:30] sold at a great price, by the way, into the Israeli domestic market. So I don't know, again, that somebody's taking a chance on LNG at this point, like Shell did on BG at the bottom of the last one. I don't know anybody-

Breanne Dougher...:      
Well, Anadarko has Mozambique, which would be LNG.

Raoul LeBlanc:                  
Yes.

Breanne Dougher...:      
But...

Raoul LeBlanc:                  
Right.

Breanne Dougher...:      
Interesting.

Raoul LeBlanc:                  
But not in the post-COVID context.

Breanne Dougher...:      
Yeah, no, exactly. I guess that's a very important point to lay out here, is that obviously one of these deals was [00:19:00] done pre-COVID, and one of them was done post, which are two very different worlds. So when we think of what could be appealing out there if people are prowling, anything come to mind? If it's not gas, do we think that there's some appeal in some sort of oil theme that people might be going for, whether it's onshore North America or deep water or looking to more emerging opportunities globally? Anything coming out, [00:19:30] maybe not specific to this deal? I imagine I'm getting a lot of blank faces, and nobody's really jumping on this as I keep babbling through the statement. So maybe nobody has anything to [crosstalk 00:19:40]-

Raoul LeBlanc:                  
Well, I don't know. It's a bit of a sucker's game.

Breanne Dougher...:      
... which means this question just kind of fell flat, and we can move on to another one.

Raoul LeBlanc:                  
It's a bit of a sucker's game. I've never seen anybody or heard of anybody that was really able to predict them. You can throw out a whole bunch of names, but I find deals to be so idiosyncratic that it's like, "Well, this happened, and [00:20:00] these five things happened, and these two management teams thought it was a good idea." It's very difficult to predict. Are there more likely combinations? Absolutely. But to be able to predict specific combinations, I think, is pretty difficult. So I tend to shy away from that, although if you do it and it happens, you look good. But I just...

Breanne Dougher...:      
What about even a theme, though? Like, do you think there's somebody who... If you're out there and looking, do you want to look deep [00:20:30] water? Do you want to look offshore?

Raoul LeBlanc:                  
For my part, I think the next theme is a wave of mergers of equals from companies that really need... that are in a difficult financial condition and good operational condition, and just try to get together to lower the cost of capital and create a bigger enterprise. I don't think that happens for another two quarters as we move through the distress process. That'd be my guess, but...

Hill Vaden:                         
If a merger of equals of two [00:21:00] struggling companies, how do they make that happen? I mean, is there...

Raoul LeBlanc:                  
No premium.

Hill Vaden:                         
No premium? All stock again?

Raoul LeBlanc:                  
Yes. Oh, yeah, yeah. You've got to do stock for stock. If you're distressed, you don't want to... You don't want one company doing it, so you have one company in a low-premium, stock-for-stock deal, and then you take it and then you try dramatically to reduce your cost, right?

Hassan Eltorie:                 
I agree with that. I mean, we did some research looking at the different peer groups and the [00:21:30] different sizes of both acquisitions and targets, and what you'll see is that the smaller guys are all trying to get bigger, because bigger gives you access to capital. That gives you cheaper access to debt. It's going to help with your shareholders. So I think if, like Raoul is saying, if anything were to happen, we think merger of equals, and especially it could start off on the smaller end of company size. So it's something to keep a look at, but we don't think anything's imminent, for sure.

Hill Vaden:                         
How about explorationists? I mean, this is the [00:22:00] second independent explorer to get gobbled up, Anadarko being the other one. There's a couple others, Tullow and a few others. Exploration, as a business, has a different value in the type of fossil-fuel-constrained world that we're moving into. Do some of these majors want to expand their explorationist capability with some acquisitions of explorers? Or would explorers merge in the way that two unconventional specialists merge? Any thoughts on that?

Hassan Eltorie:                 
[00:22:30] If I can comment on that or take a stab on that, I'll tell you I don't think Chevron acquired Noble for its exploration capabilities. I think it would have been nice to have in a totally different commodity environment, but in today's world, I don't think there's a lot of added benefit to having that. So I'm not sure that's going to be a theme that sparks M&A going forward. I don't know if that answers your question or anybody else wants to chime in on that.

Justin Jacobs:                    
Yeah. I would say if you're looking at some of the European majors who are [00:23:00] pivoting away from long-term oil and gas prospects, I think they're not going to be going after some of these explorers as well. If you look at Tullow, somebody like Shell or Total might have been a kind of obvious suitor, but I think they're turning a bit away from that business. You might have other assets that are attractive, but if you're looking at more frontiery kind of exploration plays, I think it's tough given the uncertain outlook over demand long term and [00:23:30] oil prices and everything. So I think it's a tough market for those guys.

Hill Vaden:                         
So more likely mergers of equals among some of the North America shale specialists and some of the other independents?

Hassan Eltorie:                 
I think that's right.

Justin Jacobs:                    
Yeah.

Hill Vaden:                         
And when we're looking at some of the shale, this... Will the majors continue to grow their presence in the Permian? A lot of the focus of the Anadarko deal, in particular, was [00:24:00] Oxy and Chevron, in its initial bid, growing the Permian. Noble has, I suppose, a small Permian position, not quite as substantial.

Raoul LeBlanc:                  
Yeah. It's a good question, Hill. I think the question really revolves around do the majors currently have enough acreage and undrilled opportunity set to achieve the ambitions that they have set out for this? So, number one, I think that, while we always talk about, "Oh, they've got their balance sheets. They're going to hit their targets," the whole COVID experience [00:24:30] is a bit different from a cycle that goes down to 45 for a little while and comes back. Right? So I think that they may pull in their horns just a little bit, which means that their current existing inventory goes further and may do the job.
I've been saying for a while that I thought that Exxon probably needed more acreage to fully realize its ambitions. That may not be the case. And given that they may also be looking toward a de- [00:25:00] leveraging... Hassan noted the fairly significant leverage, not so much for Exxon and certainly not for ConocoPhillips, but for some of the other super majors, right? The European super majors have a little bit heavier debt load. And so the notion of them taking on something to ramp that up and accelerate activities in the Permian, I think, is a little bit less likely now, or rather other priorities may have risen up the pecking order [00:25:30] here due to global events in the meantime. So what it does mean is that I think the maybe independents that may be looking for suitors, it gets a little bit tougher to find those very large, integrated companies that may be willing to snap up an acreage position.

Justin Jacobs:                    
I feel like Exxon, in particular, they're under a lot of pressure from shareholders to kind of reign in spending and keep an eye on the balance sheet because they [00:26:00] tried to spend through this down cycle, and they got pretty extended. [crosstalk 00:26:06].

Raoul LeBlanc:                  
Yeah, [crosstalk 00:26:07]. They canceled their dividends, right?

Justin Jacobs:                    
Exactly. Yeah. So it doesn't mean they can't do a deal, but they're going to have to put forward a pretty strong case to shareholders to pull something off like that.

Raoul LeBlanc:                  
That's a good point, Justin. And the only way probably to do that is to buy something that already has lots of cash flow. Well, frankly, that's not why you want to buy something in the Permian these [00:26:30] days necessarily. Anadarko was a good choice actually in that regard because it did have more cash flow, I think, than some others, and Oxy is probably reaping the benefits of that now.

Breanne Dougher...:      
But in general, I mean, we typically expect when majors pick up more positions, particularly in the onshore, they pursue typically lower growth rates as a whole. So in general, this should be... The more majors get involved [00:27:00] in the onshore plays, we can expect slightly slower growth to come out of those. Is that fair? Although, I guess, we're expecting that anyways because of the commodity environment and just general behavior. So this increased presence of majors maybe isn't making as much of an impact as it would have a couple of years ago.

Raoul LeBlanc:                  
Yeah, it's funny, I always felt like... People say, "Oh, the majors are getting in. Everything's going to accelerate now." And to some degree, they do have the balance sheets to go through many cycles, and you have seen [00:27:30] those by Exxon, in particular, but also Chevron really ramp up in the last little while. However, I do believe that consolidation, in general, particularly if it's a synergy-related kind of deal, tends to slow activity, and not just for the period in which the two companies are trying to merge.
But often you're looking to high-grade your portfolio and maybe spend a little bit less, and I think that's certainly the case in the current environment. So [00:28:00] I think these deals that happen result in lower overall CapEx, better CapEx probably. And I think Oxy's an extreme example of that, right? I mean, they bought it, and then they cut their CapEx really in half, and you know they're drilling the best of the best. Okay? And I think Chevron will do the same thing here and result in overall lower growth and lower CapEx and better.

Breanne Dougher...:      
I don't know if anybody wants to comment on the more global side. Do we think that Chevron's experience, though, might actually [00:28:30] accelerate some of the Eastern Mediterranean opportunities that are in this portfolio now just because they have some capabilities there? So we might have more slowing in some of these plays, particularly on the North American onshore side of things, but maybe globally, it actually provides some support and acceleration?

Hassan Eltorie:                 
I think that's a really good point. I mean, there's no doubt that Noble didn't have the LNG experience, if that was going to be the way that the East Mediterranean is going to be monetized. There are several options on the table, including pipelines, [00:29:00] including utilizing underutilized capacity in Egypt's LNG facility. So there are multiple options. But let's say if they go the LNG route or really anything else, just given the size of Chevron's balance sheet and its technical expertise, there's no doubt that they will be able to execute, I think, in a more efficient, more robust manner than Noble ever could.
I mean, following up on that, just even managing the above-ground risks that are inherent in the Middle East [00:29:30] generally, and not just between Middle Eastern countries, but even looking at Turkey-Cyprus, for example, and the maritime border dispute there, a company the size of Chevron can withstand some of these above-ground risk shocks if they were to materialize. Noble would have, I think, a lot more difficulty managing something like that. So definitely Chevron is better equipped.

Breanne Dougher...:      
Interesting. I think I actually know the answer to this, but I am going [00:30:00] to put each of you on the spot. I'm scared that we're all going to end up on one side of this. Maybe I'll just take the contrarian view just because. But I thought we'd put a little bit of M&A over-under. So as we're all aware of the deal-counting, Q1-Q2 was record low, so let's just take that off the table as far as consideration.
But as we look to Q3 and Q4, and we're going to leave a little bit of context. The five-year Q3-Q4 combo of deal-count average was 133. The maximum, which happened [00:30:30] in 2016, was 164. And the fewest deals in the back half of the year done was 2019, and it was 91. I want each of you to say over-under on whether or not we think we're hitting a 91 deal-count on the back half of this year, which would be the lowest level, which was last year as well. Do we think we're coming in below that, or do we think we might eke out above it? And asset deal. It could be an asset deal. It includes assets and corporates, of course. So 91.

Hassan Eltorie:                 
I'd say under.

Breanne Dougher...:      
[00:31:00] Under?

Hassan Eltorie:                 
Mm-hmm (affirmative).

Breanne Dougher...:      
Okay. Raoul?

Raoul LeBlanc:                  
Yeah, I'm going to have to go under. I want to be contrarian. I'd like to, but that just seems unlikely.

Justin Jacobs:                    
Yeah. Predictably under. It's pretty tough out there.

Breanne Dougher...:      
Hill, come on. You've got to give me one.

Hill Vaden:                         
I'm trying to see how... I mean, even on the call yesterday, the Chevron CEO was talking about how it's a bad time to be selling assets. So whether they're an asset-only deal or a takeover, [00:31:30] it's hard to see 92 deals over the next six months.

Raoul LeBlanc:                  
How about this? Hold on. What if you add deals and bankruptcies?

Justin Jacobs:                    
Yeah, I was going to say things that fall out of bankruptcies potentially.

Raoul LeBlanc:                  
Then I'm taking the over.

Hill Vaden:                         
Yeah. I'll take the over if you include bankruptcies, now that you mention it.

Breanne Dougher...:      
You know what? That makes for an equally interesting conversation that we can revisit maybe at the end of Q4 or Q1 for '21.

Raoul LeBlanc:                  
Exactly. Start tracking it.

Justin Jacobs:                    
Yeah, absolutely.

Hill Vaden:                         
All right. Well, that's [00:32:00] maybe as good a place as any to end the podcast here. Thank you all for joining us on relatively short notice. We've only had about 24 hours that, Justin, you and I and Hassan, you were consumed yesterday putting together, organizing the conversation to release a note to clients on all of this, which is a great turnaround and pretty well-received all around the board. So thank you all, and we will be back with another topic soon. Thank you.

Raoul LeBlanc:                  
Thanks.

Hassan Eltorie:                 
Thanks.

Breanne Dougher...:      
[00:32:30] Thanks, guys.

Speaker 1:                          
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