Selling 385,000 acres and 415 MMcfe/d
Noble Energy (ticker: NBL) announced the sale of all of its upstream assets in Appalachia today, in a deal valued at $1.225 billion.
Noble will divest 385,000 net acres in Appalachia, which are producing about 415 MMcfe/d (88% natural gas). Total proved reserves from these assets are about 1.5 Tcfe. The buyer will assume all responsibility for up to 430 MMcf/d of Noble’s transportation commitments, which it established to support production. The acreage will retain its dedication to CONE Midstream (ticker: CNNX).
Source: Noble Energy
Noble keeping its midstream interest for now
Originally publically offered in late 2014, CONE Midstream was formed by Noble and CONSOL Energy (ticker: CNX) to serve as a midstream company for the two founders. Noble Energy currently owns 13.15% of CONE, which it will retain.
The company may sell its stake in CONE in the future, though. In Noble’s conference call today, NBL Chairman and CEO David Stover did not commit to selling CONE, but did say “We’ll have to look at that pretty hard. I think the nice part is this probably actually helps the value of CONE when you think of somebody coming in that probably has plans to be maybe a little more aggressive on development than fit in our portfolio. So we’ll just have to see how that plays out.”
Noble has not disclosed the buyer of its assets. The payment includes $1.125 in cash up front, with an additional $100 million paid over the next three years. This payment is contingent on the Dominion South gas price rising above $3.30/MMBTU. The transaction is expected to close by the end of June.
Proceeds will pay down CWEI acquisition
Noble has been active in the Marcellus since 2011, but has shifted its focus to other plays in the U.S. David Stover commented that although the Marcellus has performed strongly, the company is now focusing on its higher-margin liquids-rich assets. In January the company dove into the Delaware Basin, purchasing Clayton Williams Energy for $2.7 billion. The proceeds from the Marcellus sale will be used to pay down “essentially all of the debt borrowings resulting from the Clayton Williams Energy transaction.”
