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Noble Energy Continues to Divest, Sells Assets for $340M
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Per a media report, Noble Energy, Inc has entered into an agreement to divest minerals and royalty package to Houston-based Black Stone Minerals LP (BSM - Free Report) for $340 million.
Per the agreement, the acreage includes about 1.1 million gross mineral acres, 380,000 gross acres of non-participating royalty interests and 600,000 gross acres of overriding royalty interests. Notably, this acreage is spread across 20 states with significant concentration in Texas, Oklahoma, and North Dakota. Further, the aforementioned deal is expected to close on Nov 28.
The acreage is situated in the Permian Basin, the Bakken/Three Forks play, the Powder River Basin in Wyoming, the SCOOP play in Oklahoma and the Granite Wash play in Texas.
Why is Noble Energy Divesting?
Noble Energy has been divesting its non-core assets at regular intervals when it gets a suitable buyer for its non-core assets. In May 2017, the company divested assets worth $765 million to Quantum Energy Partners. Most recently, the company signed an agreement to divest 30,200 net acres of its non-core DJ Basin portion to SRC Energy Inc, for $608 million in November 2017. The sales proceeds will help the company to develop core assets and strengthen balance sheet position.
Noble Energy operated the Tamar field with a 36% working interest before it had divested 3% interest in the same to Harel Group back in 2016. Notably, it currently anticipates monetizing an approximate 7.5% working interest sale in the same over the next twelve months for funding its Leviathan capital program in 2018. Further, it expects to retain a 25% working interest and operatorship in Tamar.
Following completion of the sell-down process, the company has plans to retain a 25% working interest in the Tamar field, which has recoverable gross mean natural gas resources of 10 trillion cubic feet.
Our View
Notably, the monetary gains from Noble Energy’s past and ongoing divestments are aiding it to focus on core assets and carry out further development activities in these assets. Notably, gains from developing the high-return assets are expected drive the future performance over next few years and improve the financial position of the company.
The proceeds from these divestitures are aiding the company to lower its high level of existing debt burden. As of Sep 30, 2017, the company's long-term debt was pegged at $7,487 million. Notably, we expect the company to gain and strengthen balance sheet position, through periodic ongoing divestments and by monetizing its non-core assets.
Price Movement
Shares of Noble Energy have underperformed the industry in the last 12 months. The company’s shares lost 25.4%, wider than the industry’s loss of 15.6%.
Zacks Rank & Peer Picks
Noble Energy currently carries a Zacks Rank #3 (Hold).
Northern Oil’s third-quarter 2017 adjusted earnings of 4 cents per share beat the Zacks Consensus Estimate by 500%. Additionally, its current year estimates have increased to 4 cents from a loss of a cent in the last 30 days.
Denbury Resources’ third-quarter 2017 adjusted earnings of 4 cents per share beat the Zacks Consensus Estimate by 500%. Additionally, its current quarter estimates have increased to 3 cents from a cent in the last 30 days.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Noble Energy Continues to Divest, Sells Assets for $340M
Per a media report, Noble Energy, Inc has entered into an agreement to divest minerals and royalty package to Houston-based Black Stone Minerals LP (BSM - Free Report) for $340 million.
Per the agreement, the acreage includes about 1.1 million gross mineral acres, 380,000 gross acres of non-participating royalty interests and 600,000 gross acres of overriding royalty interests. Notably, this acreage is spread across 20 states with significant concentration in Texas, Oklahoma, and North Dakota. Further, the aforementioned deal is expected to close on Nov 28.
The acreage is situated in the Permian Basin, the Bakken/Three Forks play, the Powder River Basin in Wyoming, the SCOOP play in Oklahoma and the Granite Wash play in Texas.
Why is Noble Energy Divesting?
Noble Energy has been divesting its non-core assets at regular intervals when it gets a suitable buyer for its non-core assets. In May 2017, the company divested assets worth $765 million to Quantum Energy Partners. Most recently, the company signed an agreement to divest 30,200 net acres of its non-core DJ Basin portion to SRC Energy Inc, for $608 million in November 2017. The sales proceeds will help the company to develop core assets and strengthen balance sheet position.
Noble Energy operated the Tamar field with a 36% working interest before it had divested 3% interest in the same to Harel Group back in 2016. Notably, it currently anticipates monetizing an approximate 7.5% working interest sale in the same over the next twelve months for funding its Leviathan capital program in 2018. Further, it expects to retain a 25% working interest and operatorship in Tamar.
Following completion of the sell-down process, the company has plans to retain a 25% working interest in the Tamar field, which has recoverable gross mean natural gas resources of 10 trillion cubic feet.
Our View
Notably, the monetary gains from Noble Energy’s past and ongoing divestments are aiding it to focus on core assets and carry out further development activities in these assets. Notably, gains from developing the high-return assets are expected drive the future performance over next few years and improve the financial position of the company.
The proceeds from these divestitures are aiding the company to lower its high level of existing debt burden. As of Sep 30, 2017, the company's long-term debt was pegged at $7,487 million. Notably, we expect the company to gain and strengthen balance sheet position, through periodic ongoing divestments and by monetizing its non-core assets.
Price Movement
Shares of Noble Energy have underperformed the industry in the last 12 months. The company’s shares lost 25.4%, wider than the industry’s loss of 15.6%.
Zacks Rank & Peer Picks
Noble Energy currently carries a Zacks Rank #3 (Hold).
Investors can consider better-ranked stocks from the same industry like Northern Oil and Gas, Inc. (NOG - Free Report) and Denbury Resources Inc. , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Northern Oil’s third-quarter 2017 adjusted earnings of 4 cents per share beat the Zacks Consensus Estimate by 500%. Additionally, its current year estimates have increased to 4 cents from a loss of a cent in the last 30 days.
Denbury Resources’ third-quarter 2017 adjusted earnings of 4 cents per share beat the Zacks Consensus Estimate by 500%. Additionally, its current quarter estimates have increased to 3 cents from a cent in the last 30 days.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>