The company, based in San Ramon, Calif., said it would purchase Houston-based Noble in an all-stock transaction for $5 billion, $10.38 per share, the first such M&A deal after COVID-19 demolished energy demand this spring, pushing several independent U.S. oil and gas companies into bankruptcy. The deal is still subject to Noble shareholder approval, but is expected to be completed in the fourth quarter, Chevron said in a statement.

“This is a cost-effective opportunity for Chevron to acquire additional proved reserves and resources,” Chevron CEO Mike Wirth said in a statement Monday morning. “Noble Energy’s multi-asset, high-quality portfolio will enhance geographic diversity, increase capital flexibility, and improve our ability to generate strong cash flow.”

Chevron is the second-largest stand-alone oil and gas company in the U.S. after Exxon Mobil, and is currently at No. 15 on the Fortune 500. Noble shares rose by more than 6% in the hours after the announcement, while Chevron shares were down by 1.5%.

The deal has a total enterprise value including debt of $13 billion, Chevron said. Noble’s assets will expand the company’s reach across Colorado’s DJ basin and 92,000 acres of the Permian Basin—the blockbuster Texan oilfield at the heart of the U.S. shale boom—and includes assets off the coast of Israel, a growing hub for gas production.

The Permian assets, in particular, will fulfill Chevron’s efforts to expand in the region, after a planned acquisition of Anadarko last year fell through when the company instead chose a deal with Occidental. Chevron chose to receive a $1 billion breakup fee instead of pursuing a bidding war.

“We’ve always said that we have a high bar for M&A, and this transaction clears those hurdles,” Wirth said in a call with investors following the announcement. The deal would also produce an estimated $300 million in pretax savings, including reductions in corporate office jobs, he added, and the option to scale up production as demand for energy returns.

The deal also represents an interesting expansion into the eastern Mediterranean: The Israel assets represent Noble’s “crown jewel,” said Jean-Baptiste Bouzard, an analyst on the upstream research team at Wood Mackenzie, a Scottish energy consultancy. The company’s position in the east Med also includes a discovery off the coast of Cyprus.

Aside from local energy markets, including Egypt, the region also offers a closer transit-way through the Suez Canal to the energy-hungry economies of Asia.

“The eastern Med is proving to be quite a prolific hydrocarbon basin, and Noble was there right at the beginning,” Wirth said on the call.

Demand for gas in the region continues to grow, he said. While gas prices have struggled with the drop in demand, paired with global overcapacity that has sent prices into a tailspin, Wirth’s bet on the region’s gas assets is a one that many others in the sector—including Warren Buffett, who recently said he would acquire assets from Dominion Energy—are making: that as economies move to decarbonize, gas—while still a hydrocarbon—will be a lower-carbon option compared with coal.

“It’s widely acknowledged that it’s a fuel that will continue to displace coal for electricity generation,” Wirth said.

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