Noble Energy acquires Rosetta Resources, accesses Permian, Eagle Ford shale plays

Noble Energy scores first big M&A since price of oil dropped by 50%

Noble Energy Inc said Monday it will acquire Rosetta Resources Inc for about $2 billion in stock, giving it a presence in the Permian and Eagle Ford shale plays.

Dave Stover, Noble Energy’s chairman and CEO.

“The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic in the U.S., which will expand our resource base and development inventory and further diversify our portfolio,” said Dave Stover, Noble Energy’s chairman, CEO, and president in a press release.

Rosetta’s liquids-rich asset base includes approximately 50,000 net acres in the Eagle Ford Shale and 56,000 net acres in the Permian (46,000 acres in the Delaware Basin and 10,000 acres in the Midland Basin).

Noble Energy has identified in excess of 1,800 gross horizontal drilling locations for development, providing net unrisked resource potential of approximately one billion barrels of oil equivalent.

Rosetta’s assets produced 66 thousand barrels of oil equivalent per day in the first quarter of 2015, and year-end 2014 proved reserves were 282 million barrels of oil equivalent.  More than 60 percent of Rosetta’s current production and proved reserves are liquids.

“The deal will accelerate value delivery from our strong asset base, and the all-stock nature of the transaction will allow our shareholders to continue to reap that value growth across commodity price cycles,” said Jim Craddock, Rosetta’s chairman, CEO and president.

Jim Craddock, Rosetta’s chairman, CEO and president.

Noble Energy says it anticipates a compounded annual production growth rate from these assets over the next several years of approximately 15 percent, generating positive free cash flow on an annual basis.

The boards of directors of both companies have unanimously approved the terms of the agreement, and Rosetta’s board has recommended that its shareholders approve the transaction.  Completion of the transaction is subject to the approval of the Rosetta shareholders and certain regulatory approvals and customary conditions.  The transaction is expected to close in the third quarter of 2015.

Noble Energy has core operations onshore in the U.S., primarily in the DJ Basin and Marcellus Shale, in the Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa.

A nearly 50 per cent drop in crude prices since June highs of over $100 per barrel has for months raised industry expectations for a wave of mergers and acquisitions in the highly-fragmented shale oil industry.