Noble Energy Inc
) entered into an agreement for sale of its Kansas oil and natural
gas assets to a unit of privately-owned Citation Oil & Gas
Corporation for a sum of $140 million. The deal is expected to
close in September 2012.
Assets involved in the company's divestiture program include 250
producing wells on an area of roughly 14,000 acres. The area is
mainly used for crude oil production. The Kansas play's current
production capacity is approximately 1000 barrels of oil equivalent
per day with net proved reserves of 7 million barrels of oil
This is the third sale undertaken by the company and is a part of
its proposed asset divestment program. With this asset sale, Noble
Energy completed the first phase of divestment in the onshore
domestic market. Previously, Noble Energy had divested its assets
in the Permian Basin and in Texas and Oklahoma for an aggregate
amount of $937 million.
Meanwhile, the company also completed the sale of Dumbarton and
Lochranza properties in the North Sea as announced in May 2012 for
an amount of $117 million. In total, these transactions are
expected to generate roughly after-tax proceeds of $1.1 billion by
the end of the third quarter 2012.
Noble Energy aims to sell a series of small-scale assets located in
the Mid-continent, Gulf Coast, San Juan, and Ark-La-Tex areas and
the remaining North Sea resources over the period 2012 through
The gains from this sale will help the company to reinvest in its
core operations like the Denver-Julesburg (DJ) Basin in Colorado
and Wyoming as well as the Marcellus play, thereby enhancing future
profitability. In addition, the proceeds would improve Noble
Energy's liquidity position and enable it to acquire other
lucrative properties which would fetch higher returns. We believe
the divestiture of these properties also cushioned Noble Energy's
operations from the ongoing depressed crude oil prices.
The company projects third quarter 2012 sales volumes to average
242-250 MBoe/d (thousand barrels of oil equivalent per day). Noble
Energy expects its sales volumes to improve owing to higher
contribution from Galapagos, continuation of the drilling programs
in DJ Basin and Marcellus Shale, and increased sales in Israel.
The company also raised its 2012 volume guidance at the midpoint
by 2 MBoe/d on a pro forma basis. The new 2012 volume range is at
236 Mboe/d to 244 Mboe/d.
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Noble Energy's closest peer,
Anadarko Petroleum Corporation
), monetized a part of its holding in the Lucius development
project in Gulf of Mexico and in the Salt Creek field in Wyoming,
which led the company to accrue a total of $956 million.
The Zacks Consensus Estimates for the third quarter and full-year
2012 are currently at $1.09 per share and $5.09 per share,
respectively. Noble Energy holds a Zacks #3 Rank, which translates
into a short-term Hold rating.
Noble Energy is an independent exploration and production (E&P)
company, having high-grade hydrocarbon assets across the U.S. and
several international locations. Noble Energy chiefly focuses on
organic growth from exploration and development drilling
activities. This is further strengthened by suitable mergers and
acquisitions and divestiture of non-core assets.