The Acquisition of Anadarko by Chevron. Discounted Cash Flow Analysis

Inhaltsverzeichnis (Table of Contents)

• 1.0 Introduction
• 2.0 Industry analysis
• 2.1 Company and Industry at a glance
• 2.2 Industry outlook
• 2.3 Firm Value Drivers
• 3.0 DCF Valuation
• 3.1 Forecasts
• 3.2 Choice of DCF methods
• 3.3 Leverage and Tax rate
• 3.4 Cost of Equity
• 3.5 Cost of Debt
• 3.6 Valuation results
• 4.0 Sensitivity analysis
• 5.0 Synergies
• 6.0 Value Creation
• 7.0 Conclusion

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This thesis aims to value Anadarko Petroleum Corporation using the Discounted Cash Flow (DCF) method, incorporating reasonable assumptions for post-merger synergy effects with Chevron. The analysis will incorporate insights from the Oil & Gas (O&G) industry, Anadarko and Chevron's positions within the industry, and their respective value chains. The WACC method will be used to estimate the cost of capital, along with a sensitivity analysis to assess the impact of key input variables. Lastly, the synergy estimates will be compared to the DCF calculations to determine if the proposed acquisition would have created value for both parties.

• Valuation of Anadarko Petroleum Corporation using DCF
• Analysis of the Oil & Gas industry and its outlook
• Determination of the cost of capital using WACC
• Assessment of synergy effects resulting from the potential merger
• Evaluation of the fairness of the proposed acquisition price

Zusammenfassung der Kapitel (Chapter Summaries)

• 1.0 Introduction: This chapter provides an overview of the acquisition of Anadarko by Chevron, outlining the initial bid, the final outcome, and the motivation behind the analysis.
• 2.0 Industry analysis: This chapter delves into the Oil & Gas industry, providing a brief overview of the company and the sector. It also analyzes the industry outlook and identifies the key value drivers for firms within this sector.
• 3.0 DCF Valuation: This chapter explores the DCF valuation method, outlining the assumptions used for forecasting and the selection of appropriate DCF methods. It also examines the determination of the cost of capital, including the cost of equity and cost of debt. Finally, the chapter presents the results of the DCF valuation.
• 4.0 Sensitivity analysis: This chapter analyzes the sensitivity of the DCF results to various input variables such as the Weighted Average Cost of Capital (WACC) and the terminal growth rate.
• 5.0 Synergies: This chapter discusses the potential synergies associated with the merger, providing an estimation of their value and outlining their significance for both Chevron and Anadarko.
• 6.0 Value Creation: This chapter examines the potential value creation resulting from the acquisition. It compares the estimated value with the original bid price, considering the perspective of both Chevron and Anadarko shareholders.

Schlüsselwörter (Keywords)

This thesis focuses on the valuation of Anadarko Petroleum Corporation using the Discounted Cash Flow (DCF) method. It analyzes the Oil & Gas industry, including its outlook and key value drivers. The analysis utilizes the WACC method for estimating the cost of capital, incorporating cost of equity and cost of debt. The thesis further investigates the potential synergies of the proposed merger and evaluates the acquisition price's fairness, considering the value creation perspective for both companies.