Noble Energy (NYSE:NBL) Off-Loads Marcellus Shale Gas Assets for $1.23 Billion

U.S. oil and natural gas producer Noble Energy (NYSE:NBL) is shifting its investment focus toward its more lucrative oil plays after announcing the $1.23 billion sale of its Marcellus Shale natural gas asset portfolio to an undisclosed buyer.

The transaction, however, excludes its stake in natural gas pipeline firm CONE Midstream (NYSE:CNNX).

The amount includes an upfront payment of $1.13 billion and a contingent amount of $100 million divided into three separate payments of $33.3 million, according to a May 2 release.

The assets being sold currently produce about 415 million cubic feet of natural per equivalent per day spread across 385,000 acres in West Virginia and southern Pennsylvania.

As of the end of 2016, these properties hosted total proved reserves of 1.5 trillion cubic feet of natural gas equivalent.

As part of the transaction, the buyer will take responsibility of Noble Energy’s firm transportation covering up to 430 million cubic feet of natural gas per day, created to support upstream production from the Marcellus.

Noble Energy expects to complete the acquisition by the end of the second quarter.

Proceeds from the deal will be used to trim the debt associated with the company’s $2.7 billion takeover of Clayton Williams Energy Inc., which closed in April and substantially expanded its core Delaware Basin position.

“This enables us to further focus our organization on our highest-return areas that will deliver industry-leading U.S. onshore volume and cash flow growth,” Noble Energy Chairman, President and CEO David Stover said in the statement.

Strong First-Quarter Results

The transaction came a day after the company reported solid results in the first quarter of 2017.

Noble Energy posted an adjusted net loss attributable to shareholders of $23 million, or 5 U.S. cents per share, narrowing from a loss of $228 million, or 53 cents per share recorded in the year-ago period.

The net income adjustments included an $18 million impairment associated with undeveloped Gulf of Mexico lease holdings. Noble Energy also had $107 million in unrealized commodity derivative gains during the period.

Total revenues, meanwhile, were $1.04 billion, up from $724 million in the comparable 2016 quarter.

The company also delivered 382 million barrels of oil equivalent per day in sales volumes, with Israel, Gulf of Mexico and U.S. onshore volumes all at or surpassing the top end of guidance.

Noble Energy’s oil volumes were at the high end of guidance at 119 million barrels per day, spurred by strong performances from the Delaware and DJ basins.

Total organic capital expenditures were $616 million, while total liquidity stood at $4.8 billion.

Second-Quarter Outlook

Noble Energy expects higher volumes from its U.S. onshore liquid assets in the second quarter as more wells come online in the DJ Basin, Eagle Ford and the Delaware, and as the company realizes the benefits from its Delaware Basin acquisitions.

The company also anticipates between $650 million and $750 million in capital expenditures during the quarter to support major projects.

Key Shareholders

Capital Research Global Investors is Noble Energy’s largest shareholder as of the end of 2016, holding 52.2 million shares in the company valued at $1.99 billion.

Another major shareholder is Capital World Investors, which owned 44.5 million shares in the company valued at $1.70 billion as of the end of the same period.

Noble Energy’s shares closed at $31.42 on May 2, down 2.72%.