Independent oil and gas player Noble Energy said it will buy smaller peer Clayton Williams Energy in a bid to expand its footprint in the Permian shale play. The US$2.7-billion deal will comprise cash and stock, the buyer said in a news release.
Clayton Williams shareholders will receive US$34.75 in cash plus 2.7874 Noble Energy shares for each Clayton share they hold, which comes up to 55 million shares and US$665 million in cash. Noble will finance the cash portion of its offer with a draw on a US$4-billion revolving debt facility.
Noble Energy's chief executive commented that "This transaction brings all the key elements we value: excellent rock quality, a large contiguous acreage position adjacent to our own, and robust midstream opportunities, reinforcing the Delaware Basin as a long-term value and growth driver for Noble Energy."
Among the assets that Noble will take control over under the deal are a total of 171,000 net acres in the Permian, of them 71,000 acres adjacent to Noble's own acreage in the Delaware Basin, which comprises 47,200 net acres.
The Delaware Basin contains part of the Wolfcamp shale, which recently made headlines after the U.S. Geological Survey estimated the deposit could contain as much as 20 billion barrels of recoverable crude oil.
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Noble Energy said that there are already 2,400 identified drilling locations in parts of the Wolfcamp play, with estimated net unrisked resources of around a billion barrels of oil equivalent. In the rest of the new acreages there was also "significant upward potential."
The buyer's immediate base plan is to increase the output from the newly acquired acreage from the current 10,000 barrels of oil equivalent, of them 70 percent oil, to 60,000 barrels of oil equivalent by 2020.
The deal also includes midstream operations in the Permian, comprising more than 300 miles of oil, gas and produced water gathering pipelines.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More