Noble Energy, Inc. NBL announced that it has signed an agreement to divest approximately 30,200 net acres of company’s non-core DJ Basin portion to SRC Energy Inc, for a sum of $608 million.
Details of the Sale
The acreage located in Weld County, CO, include Non-operated production of 2,500 barrels of oil equivalent per day (Boe/d) and operated production of 1,600 Boe/d. Notably, the initial closing is anticipated to conclude by the end of 2017predicted toinclude mainly non-operated production acreage, followed by a second closing that is expected to conclude by mid-2018 and will include mainly producing properties.
How will this Benefit Noble Energy?
Noble Energy is currently making optimum use of its non-core properties and utilizing the proceeds to lower debt levels. Additionally, it is undertaking investments to further strengthen its core operation.
The DJ Basin enjoys a distinct competitive advantage in terms of better infrastructure and long lateral drilling benefits. The competitive advantage that the rest of the liquids-rich area enjoys will help the company with strong production volumes for the rest of year.
The company has a diversified portfolio of short and long-term projects, both onshore and offshore, in several locations. The company gained largely from the onshore sales that accounted for major sales volume during third-quarter 2017.
Since a major portion of Noble Energy’s total production comes from its United States properties, the company is also investing substantially in these properties to further increase its total production.
Noble Energy reiterated total sales volume in the range of 380-390 thousand barrels of oil equivalent per day and U.S. onshore volumes are anticipated to be 15% higher than the third quarter levels.
Looking ahead, robust production volumes from its organic and inorganic assets especially in DJ Basin volumes, along with its planned divestiture programs are anticipated to lower existing debt burden of the company going forward.
Shares of Noble Energy have underperformed the industry in the last twelve months. The company’s shares lost 22.8%, broader than the industry’s loss of 12.4%.
A high burden of debt along with company's exposure to stringent regulations are causes of such underperformance.
Zacks Rank & Peer Picks
Noble Energy currently carries a Zacks Rank #3 (Hold).Investors can consider other better-ranked stocks from the same industry that have released their third-quarter results.
Bill Barrett Corporation BBG, Continental Resources, Inc. CLR and Newfield Exploration Company NFX, all carry Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bill Barrett reported third-quarter 2017 adjusted loss of 8 cents per share, narrower than the Zacks Consensus Estimate loss of 20 cents. Additionally, its current quarter estimates have narrowed from a loss of 19 cents in the last 30 days to a loss of 8 cents.
Continental Resources reported third-quarter 2017 adjusted earnings of 9 cents per share, narrower than the Zacks Consensus Estimate of 3 cents.Additionally, its current quarter estimates have increased from 11 cents in the last 30 days to 14 cents.
Newfield Exploration reported third-quarter 2017 adjusted earnings of 52 cents per share, narrower than the Zacks Consensus Estimate of 43 cents. Additionally, its current quarter estimates have risen from 54 cents in the last 30 days to 57 cents.
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