Noble Energy, Inc. and Clayton Williams Energy, Inc. announced Monday that the boards of directors of both companies have unanimously approved and the companies have executed a definitive agreement where Noble Energy will acquire all of the outstanding common stock of Clayton Williams Energy for $2.7 billion in Noble Energy stock and cash.
David L. Stover, Noble Energy chairman, president and CEO, said the transaction brings all the key elements the company values: “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. This combination creates the industry’s second largest Southern Delaware Basin acreage position and provides more than 4,200 drilling locations on approximately 120,000 net acres, with over 2 billion barrels of oil equivalent in net unrisked resource. In addition to the benefits driven by larger scale, the midstream assets and planned buildout provide significant synergies and substantial dropdown potential in association with our ownership in Noble Midstream Partners.”
Clayton W. Williams Jr., chairman and CEO of Clayton Williams Energy, said, “I am very proud of the company we have built over the past 25 years and I am pleased that Noble Energy will be leading the development of our properties going forward. Noble Energy’s long track record of operational excellence and value creation, as well as its reputation as a tremendous corporate citizen, make it the ideal partner for us. We look forward to being shareholders of Noble Energy and benefiting from its world class asset portfolio.”
- 71,000 highly contiguous net acres in the core of the Southern Delaware Basin in Reeves and Ward counties in Texas (directly adjacent to Noble Energy’s existing 47,200 net acres). In addition, there are an additional 100,000 net acres in other areas of the Permian Basin.
- 80% average working interest in the Southern Delaware position, with more than 95% of the acreage operated.
- 2,400 Delaware Basin gross drilling locations identified, targeting the Upper and Lower Wolfcamp A zones, along with the Wolfcamp B and C. The average lateral length of the future locations is 8,000 feet.
- Total estimated net unrisked resource potential on the acreage of over 1 billion barrels of oil equivalent in the Wolfcamp zones, with significant upside potential in other zones.
- Noble Energy’s outlook is to increase production on the acquired assets from 10 MBoe/d currently (70% oil) to approximately 60 MBoe/d in 2020 in the Company’s base plan.
- Highly competitive economics, with Wolfcamp A wells (estimated ultimate recovery of 1.0 million barrels of oil equivalent for a 7,500 foot lateral) generating approximately 60% to 90% before-tax rate of return at base and upside plan pricing, respectively.
- The acquired Delaware Basin acreage is largely undedicated to third-party oil and gas gathering and water systems, and approximately 12,500 acres are dedicated from a third-party operator.
- Existing midstream Delaware Basin assets include over 300 miles of oil, natural gas, and produced water gathering pipelines (over 100 miles for each product).