Apr 2

Chevron Makes $3.15 Billion Green Move

Stephen Bierman
Mar 2, 2022
Image: Matthew Henry via Unsplash.

U.S. oil producer Chevron Corp. has begun to put some muscle into lower emissions with a $3.15 billion deal for Renewable Energy Group’s (REG) outstanding shares.

The deal gives Chevron a bigger footprint in the renewables business. It also includes the head of REG joining Chevron’s board moving company leadership itself in a greener direction.

The deal combines REG’s growing renewable fuels production and leading feedstock capabilities with Chevron’s large manufacturing, distribution and commercial marketing position, according to a Chevron statement.

“REG was a founder of the renewable fuels industry and has been a leading innovator ever since,” Chevron Chairman and CEO Mike Wirth said. “Together, we can grow more quickly and efficiently than either could on its own.”

Chevron will use the deal to grow towards its aim of renewable fuels production capacity to 100,000 barrels per day by 2030. It also brings additional feedstock supplies and pre-treatment facilities.

REG is a leading producer of biodiesel which is made from renewable resources that are largely plant-based, with their energy coming from the sun instead of fossil fuels, according to REG website.

These feedstocks are diverted waste or byproducts from other industries, giving them new life. That helps biodiesel emit less greenhouse gases with biodiesel’s lifecycle greenhouse gas emissions up to 86% lower than those of petroleum diesel.

Biodiesel is a drop-in fuel that can be used in existing diesel vehicles and fueling infrastructure, giving diesel fleets a solution for reducing carbon emissions right away with their existing equipment, according to the site. 

Chevron will, additionally, bring develop for renewable fuels into its organizational structure. Cynthia (CJ) Warner, the REG CEO, is expected to join Chevron Board of Directors, according to Chevron.

After closing of the acquisition, Chevron’s renewable fuels business, Renewable Fuels – REG, will be headquartered in Ames, Iowa.

“This transaction delivers premium cash value to shareholders and will give us additional resources as we aim to accelerate growth and strengthen our collective ability to deliver the sustainable fuels our customers and the world need,” said CJ Warner, REG president & CEO.

The transaction price represents a premium of around 57% on a 30-day average based on closing stock prices on February 25, 2022.

The transaction has been approved by the Boards of Directors of both companies and is expected to close in the second half of 2022. The acquisition is subject to REG shareholder approval. It is also subject to regulatory approvals and other customary closing conditions.

Stephen Bierman

Stephen Bierman is a finance and energy reporter with over 15 years of experience, including at Bloomberg News and Energy Intelligence.

Tweets at: @StephenBierman1

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