Chevron Buys Apache; JP Morgan Beats on the Top and Bottom Line
US stocks are pointing to a higher open on Friday on the heels of Chevron's announcement that it will purchase Anadarko Petroleum. Additionally, JP Morgan Chase reported better than expected earnings which have catapulted the banking sector higher.
Chevron Announces Purchase of Anadarko
This is a huge deal. Chevron on Friday announced plans to acquire oil and gas exploration and production company Anadarko Petroleum in a cash and stock deal valued at $33 billion. The transaction will give the second biggest US oil company a boost in shale oil production as well as natural gas. Its clear that the big boys are now all in with the shale play. With costs of $15 per share, Chevron will be able to notch up double digit returns. Shares of Anadarko rose nearly 30% in the premarket trading following the news. Chevron shares were down 3.7% from Thursday’s close. The deal values Anadarko at $65 per share, a 37% premium to its Thursday close
JP Morgan Chase reported record Q1 earnings and revenue that exceeded analysts’ expectations as the bank benefited from higher interest rates. Higher rates allow JP Morgan to lend long at higher rates and borrow short at lower rates.
JP Morgan said profit rose 5% to $9.18 billion, or $2.65 a share, compared with expectations of $2.35 a share. Revenue also rose 5% to $29.9 billion, exceeding estimates by about $1.5 billion as net interest income grew 8%. The bank said higher rates were the catalyst. It also announced the first cryptocurrency from a major US bank, and pledged $350 million to boost the job prospects of people in under-served communities.
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