Noble Energy Inc., Houston, agreed to sell its deepwater Gulf of Mexico assets to Fieldwood Energy LLC, Houston, for $710 million in a move the company calls “the last major step” in its portfolio transformation. The deal is conditional as Fieldwood is restructuring.
Included in the sale is Noble’s interest in six producing fields and all undeveloped leases. Estimated net average production from the assets for 2018 is 20,000 boe/d for the year. Total proved reserves in the gulf as of yearend 2017 for Noble were 23 million boe.
Cash proceeds from the deal total $480 million. Fieldwood will assume all abandonment obligations associated with the properties, recorded at a book value of $230 million as of Dec. 31, 2017. A cumulative contingent payment of up to $100 million is payable to Noble from closing of the transaction through the end of 2022, determined quarterly at a rate of $2/bbl produced when the average Light Louisiana Sweet oil price exceeds $63/bbl.
Noble has been divesting assets to pay down debt borrowings from its 2017 acquisition of Clayton Williams Energy Inc. and allow the company to focus efforts on “assets that will rapidly grow our cash flows and margins, primarily the US onshore business and the Eastern Mediterranean,” said Noble Chairman, Pres. and Chief Executive Officer David L. Stover (OGJ Online, May 2, 2017).
The deal has an effective date of Jan. 1, with closing anticipated during this year’s second quarter, provided Fieldwood successfully implements a planned restructuring.
Fieldwood filed a prepackaged Chapter 11 bankruptcy case and entered into a restructuring agreement that contemplates reducing current debt by $1.6 billion, raising capital of $525 million through an equity rights offering, and the acquisition of Noble’s deepwater gulf oil and gas assets. Fieldwood would use proceeds of the rights offering to fund the acquisition, fund the costs and expenses of the Chapter 11 cases, and for general working capital after emergence from Chapter 11.
Fieldwood obtained a $60-million debtor-in-possession financing facility to operate during the restructuring process. Formed in 2013 as a portfolio company of Riverstone Holdings LLC, Fieldwood owns an interest in 500 leases covering over 2 million gross acres with 1,000 wells in the gulf.
Contact Mikaila Adams at [email protected].
