Noble Energy signs agreement to sell upstream assets in Virginia and Pennsylvania

Noble Energy has signed a definitive agreement to sell all of its upstream assets in north-west Virginia and southern Pennsylvania to an undisclosed buyer.

This transaction is valued at an aggregate amount of $1.225bn.

The amount includes upfront cash of $1.125bn followed by a subsequent contingent amount of $100m, structured as three separate payments of $33.3m.

The contingent payments to the firm are in effect if the average annual price realisation at Dominion South exceeds $3.30 per million British thermal unit in the individual annual periods from 2018 to 2020.

Noble Energy chairman, president and CEO David L Stover said: "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 organisation on our highest-return areas that will deliver industry-leading US 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."

The divestment transaction includes an existing production of around 415 million cubic feet of natural gas equivalent per day (88% natural gas) and a 100% working interest in approximately 385,000 acres. 

As of year-end of fiscal 2016, the total proved reserves 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, set up to support Marcellus upstream production.

Noble Energy's interest in CONE Midstream is not included in this deal.

The deal is expected to close by the end of the second quarter of 2017, from which proceeds will be used to pay the debt borrowings resulting from the Clayton Williams Energy transaction, which expanded the firm’s position in Delaware Basin.

Bank of America Merrill Lynch served as financial advisor to Noble Energy while Porter & Hedges acted as legal counsel.

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Image: Marcellus Shale, Noble Energy. Photo: courtesy of Noble Energy.