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Monday, January 18, 2021

Noble Energy divesting Gulf of Mexico assets for $710 million

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Noble Energy, Inc. (NYSE: NBL) announced on Thursday that a $750 million share repurchase program has been authorized by its Board.  In addition, the Company has executed an agreement to sell its deepwater Gulf of Mexico assets to Fieldwood Energy LLC (“Fieldwood”) for a total value of $710 million.

David L. Stover, Noble Energy’s Chairman, President and CEO, commented, “While continuing to deliver outstanding performance and execution across the business, we have strategically repositioned our portfolio over the last couple of years.  The sale of our Gulf of Mexico business represents the last major step in our portfolio transformation.  This has been done to focus our go-forward efforts on those assets that will rapidly grow our cash flows and margins, primarily the U.S. onshore business and the Eastern Mediterranean.  I appreciate the efforts of the many employees who have contributed to our strong legacy of exploration discovery and successful resource development in the Gulf of Mexico.  Going forward, we are concentrating the Company’s exploration capabilities on higher-impact opportunities that can drive substantial long-term value creation.”

Mr. Stover continued, “Supported by the proceeds from this transaction, along with strong projected cash flow growth, the Board of Directors has authorized a $750 million share repurchase program to enhance and accelerate value return to our shareholders.  We view the opportunity to repurchase Noble Energy stock to be an attractive return, as the current stock price does not yet fully reflect the long-term value of our assets.”

U.S. GOM Divestment

The company said cash proceeds included in the transaction total $480 million, and Fieldwood will assume all abandonment obligations associated with the properties, which the Company recorded at a book value of approximately $230 million as of December 31, 2017.  In addition, a cumulative contingent payment of up to $100 million is payable to Noble Energy from closing of the transaction through the end of 2022, determined quarterly at a rate of $2 per barrel produced when the average Light Louisiana Sweet oil price exceeds $63 per barrel.

The effective date of the transaction is January 1, 2018, with closing anticipated during the second quarter 2018, contingent upon Fieldwood successfully implementing its contemplated restructuring process.  Included in the transaction is the Company’s interest in six producing fields and all undeveloped leases.  Noble Energy estimates net production from these assets for 2018 to average slightly more than 20 thousand barrels of oil equivalent per day for the year.  Total proved reserves in the Gulf of Mexico as of year-end 2017 for the Company were 23 million barrels of oil equivalent.

Share Repurchase Program

Noble said its Board of Directors has authorized a $750 million share repurchase program during the period of 2018 through 2020.  All purchases will be made in accordance with applicable securities laws from time to time in open market or private transactions, depending on market conditions, and may be discontinued at any time.  At today’s share price, the program covers approximately six percent of the Company’s outstanding shares.

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