Current NBL Stock Info

Noble sells down its working interest in Tamar field as part of Israel’s approved natural gas regulatory framework

Noble Energy (ticker: NBL) announced the sale of a 3% working interest in the Tamar field offshore Israel today for $369 million, which gives Tamar a gross pre-tax valuation of approximately $12 billion. Noble sold the working interest in the project to Harel Group, an insurance provider and pension manager in Israel, in partnership with Israel Infrastructure Fund (IIF), Israel’s largest infrastructure private equity fund, Noble said in its press release.

Noble expects the deal to close in the third quarter of 2016, with after-tax proceeds totaling approximately $275 million.

The sale comes as Noble reduces its working interest in Tamar by 11% from 36% down to 25% as part of Israel’s approved Natural Gas Regulatory Framework. Under the terms of the agreement, Harel and IIF have the option to elect, before closing, to purchase an additional 1% working interest in the project, which at the current valuation, would net Noble an additional $123 million.

Noble expects to sell the remaining 7-8% working interest in the project over the next 36 months.

A note from UBS today said the deal valuation came in above expectations. UBS estimated the value of the Tamar field at $10.1 billion, roughly 16% less that the implied deal value. The increased value of Tamar prompted the bank to raise its net asset value on Noble’s shares by $1.

Noble plans to drill and complete a new will in Tamar without adding new equity

Also included in the company’s press release was news that Noble plans to drill and complete an additional development well at the Tamar field in response to continued increasing demand and outlook for natural gas usage within Israel. Drilling is anticipated to commence in Q4’16, according to the company.

The additional well in the Tamar field will “enhance redundancy while meeting maximum deliverability for extended peak demand periods,” according to the press release. NBL does not plan any changes to its capital program in order to drill the new well.

The well, Tamar 8, will be the field’s sixth production well, located about 100 kilometers offshore, and drilled to a depth of around 3.5 kilometers, reports Times of Israel. Completion of the well and its connection to the existing pipe network is expected to take four months.

In 2015, the Tamar field sold 252 MMcf/d of natural gas and generated net pre-tax income of $318 million for Noble. Located approximately 130 kilometers from Haifa, Tamar holds roughly 8.4 trillion cubic feet of natural gas. The additional well in the Tamar field will “enhance redundancy while meeting maximum deliverability for extended peak demand periods,” according to the press release.

Developing the Leviathan

Net proceeds from today’s sale are expected to go toward further developing the Leviathan natural gas field, also located offshore Israel. In the UBS note, the bank pointed out that the company does not plan to add new equity to develop Leviathan, “but rather utilize project financing and proceeds from the sale of Karish and Tanin ($73 million) as well as the 11% sale of its stake in Tamar.”

NBL has noted that gross investment for Tamar’s initial 1.2 Bcf/d of capacity cost $3.5 billion, and Leviathan Phase I is also envisioned to be at 1.2 Bcf/d capacity project, though it has not committed to a price tag yet.


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