Noble Energy, Inc. (NYSE: NBL) (“Noble Energy” or “the Company”) today announced that it has signed a definitive agreement to divest all of its upstream assets in northern West Virginia and southern Pennsylvania to an undisclosed buyer for a total amount of $1.225 billion. The amount includes upfront cash of $1.125 billion and an additional contingent amount of $100 million, structured as three separate payments of $33.3 million. The contingent payments to the Company are in effect should the average annual price realization at Dominion South exceed $3.30 per million Btu in the individual annual periods from 2018 through 2020.
David L. Stover, Noble Energy’s Chairman, President and CEO, commented “The Marcellus has been a strong performer for Noble Energy over the last few years, which is a direct result of the success of our employees’ efforts. During the same time period, we have also significantly expanded the inventory of investment opportunities in our liquids-rich, higher-margin onshore assets, which has led us to now divest our Marcellus position. This enables us to further focus our organization on our highest-return areas that will deliver industry-leading U.S.onshore volume and cash flow growth. This transaction also provides proceeds already exceeding our target for 2017, with several opportunities for additional proceeds ahead of us this year.”
Included in the divestment is current production of approximately 415 million cubic feet of natural gas equivalent per day (88 percent natural gas) and a 100 percent working interest in approximately 385,000 acres. Total proved reserves as of year-end 2016 related to these assets were 1.5 trillion cubic feet of natural gas equivalent. In addition, the buyer will assume responsibility for up to 430 million cubic feet of natural gas per day of the Company’s firm transportation, established to support Marcellus upstream production.
The Marcellus acreage will retain its dedication to CONE Midstream (NYSE: CNNX) for natural gas gathering. Noble Energy’s interest in CONE Midstream is not included in the transaction.
The transaction is anticipated to close by the end of the second quarter of 2017, with a January 1, 2017 effective date. Proceeds from the transaction will be used to pay down essentially all of the debt borrowings resulting from the Clayton Williams Energy transaction, which materially expanded the Company’s core Delaware Basin position.
BofA Merrill Lynch acted as financial advisor to Noble Energy and Porter & Hedges served as legal counsel.