Noble Energy to buy rival Clayton Williams for $2.7 billion
Oil producer Noble Energy will acquire rival Clayton Williams for about $2.7 billion in a cash and stock deal that will expand Noble’s presence in oil-rich West Texas.
Noble said the deal would include 71,000 net acres in the Southern Delaware Basin in Reeves and Ward counties, which are part of the larger Permian Basin, home of the some of the richest oil deposits in North America. The acquisition will create the energy’s second largest Southern Delaware shale acreage position in the Permian.
“We have been very disciplined in assessing expansion opportunities in the Delaware Basin and are extremely pleased to have reached this agreement with Clayton Williams Energy,” said David L. Stover, Noble Energy’s Chairman, President, and CEO. “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.”
Noble buying more than 2,400 new drilling locations in the Delaware basin, giving it a total of 4,200 with over 2 billion barrels in reserves, the company said in a statement. The agreement also calls for Noble to take over a large number of pipelines in Texas to carry oil from fields near the New Mexico border to transportation hubs like Houston and Louisiana.
The value of the transaction, based on Noble’s stock price the week of January 13, is about $139 per Clayton Williams Energy share or $3.2 billion in aggregate, according to Reuters. Noble said its total capital budget for 2017 is estimated at $2.1 billion-$2.5 billion and sees sales volumes between 410,000-420,000 barrels of oil per day.
Clayton Williams has been well known in the Texas oil industry as an early adopter of horizontal drilling, which has been credited with enabling hydraulic fracturing, or fracking. Clayton has been on a selling spree over the last year, specifically its non-Permian assets. The company sold all of its East Texas assets for $400 million in October, while also hiring Noble executive Patricia Cooke as its chief operating officer.
“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,” said Clayton W. Williams Jr, Chairman and CEO of Clayton Williams Energy.
Noble said it would finance the cash portion of the acquisition through a draw on its revolving credit facility, which was worth $4 billion at the end of 2016 and is expected to raise another $1 billion in 2017 through ongoing portfolio management and optimization.
The deal is expected to close in the second quarter of 2017.
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