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Acquisition of Renewable Energy Group, Inc.

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisition of Renewable Energy Group, Inc.

Acquisition of Renewable Energy Group, Inc.

On June 13, 2022, the company acquired Renewable Energy Group, Inc. (REG), an independent company focused on converting natural fats, oils and greases into advanced biofuels. REG utilizes a global integrated production, procurement, distribution and logistics network to operate 11 biorefineries in the U.S. and Europe. Ten biorefineries produce biodiesel and one produces renewable diesel. The acquisition combines REG’s growing renewable fuels production and leading feedstock capabilities with Chevron’s large manufacturing, distribution and commercial marketing position.

Chevron acquired outstanding shares of REG in an all-cash transaction valued at $3.15 billion, or $61.50 per share. As part of the transaction, the company recognized long-term debt and finance leases with a fair value of $590 million.

The acquisition was accounted for as a business combination under ASC 805, which requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Provisional fair value measurements were made for acquired assets and liabilities, and adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date, as information necessary to complete the analysis is obtained. Tangible and intangible assets were valued using a combination of replacement cost approach and discounted cash flows that incorporated internally generated price assumptions and production profiles together with appropriate operating and capital cost assumptions. Debt assumed in the acquisition was valued based on observable market prices for REG’s debt. As a result of measuring the assets acquired and the liabilities assumed at fair value, the company recognized $293 million of goodwill.

The following table summarizes the values assigned to assets acquired and liabilities assumed:

									At June 13, 2022
									(Millions of dollars)
Current assets									$	1,584
Properties, plant and equipment									1,778
Deferred tax									92
Other assets									374
Total assets acquired									3,828
Current liabilities									301
Long-term debt and finance leases									590
Other liabilities									75
Total liabilities assumed									966
Net assets acquired									$	2,862
Goodwill									293
Purchase Price									$	3,155

Pro forma financial information is not disclosed as the acquisition was deemed not to have a material impact on the company's results of operations.

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- References

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- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-URI https://asc.fasb.org/topic&trid=2303972

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 5
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472

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