Matt Zborowski
Assistant Editor
Noble Energy Inc., Houston, has agreed to sell all of its upstream assets in northern West Virginia and southern Pennsylvania to an undisclosed buyer for $1.225 billion.
Included in the divestment is 100% working interest in 385,000 acres with current production of 415 MMcfd of natural gas equivalent, of which 88% is gas. The assets' total proved reserves as of yearend 2016 were 1.5 tcf of gas equivalent.
Noble drilled or participated in 17 wells gross on the acreage in 2016 and reported 238 productive wells gross at yearend 2016. Sales volumes for the firm in the Marcellus averaged 433 MMcfed during this year's first quarter.
The acreage previously was part of a 50-50 joint venture of Noble and Consol Energy Inc., formed in 2011 and dissolved last fall, for the exploration, development, and operation primarily of Marcellus properties (OGJ Online, Oct. 31, 2016).
The buyer also will assume responsibility for as much as 430 MMcfd of Noble's firm transportation supporting Marcellus production. The Marcellus acreage will retain its dedication for gas gathering to CONE Midstream Partners LP, a master limited partnership of Noble and Consol. Noble's interest in CONE Midstream is not part of the deal.
The purchase price 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 Noble take effect should the average annual price realization at the Dominion South Point price hub exceed $3.30/MMbtu in each year during 2018-20.
The deal is effective Jan. 1 and expected to close by the end of the second quarter. Proceeds from the sale will be used to pay down almost all of Noble's debt borrowings from its acquisition of Clayton Williams Energy Inc., which closed Apr. 24, and enables the firm to further its focus on its "liquids-rich, higher-margin onshore assets" such as those in the Permian basin (OGJ Online, Jan. 16, 2017).
The firm entered the Permian in 2015 with its merger of Rosetta Resources Inc. into a subsidiary and more than doubled its Delaware basin position to 118,000 net acres with its Clayton Williams purchase. The Clayton Williams deal also doubled Noble's Delaware net unrisked resources to 2 billion boe.
Noble's current Delaware activity primarily lies in Reeves County, Tex., adjacent to the Clayton Williams acreage. By yearend, the firm expects to have six rigs running overall in the Delaware.