Noble to acquire Rosetta for $2.1 billion, enter Permian

Noble Energy Inc., Houston, has agreed to acquire Rosetta Resources Inc., Houston, in an all-stock transaction valued at $2.1 billion, plus the assumption of Rosetta’s net debt of $1.8 billion as of Mar. 31. The deal is expected to close in the third quarter.

Rosetta’s liquids-rich asset base includes 50,000 net acres in the Eagle Ford shale and 56,000 net acres in the Permian basin, of which 46,000 acres are in the Delaware basin and 10,000 are in the Midland basin.

Noble says it has identified more than 1,800 gross horizontal drilling locations. Of that total, the Permian features 1,200 locations, of which about 700 are in the Wolfcamp A interval, with the rest split among Bone Springs and other Wolfcamp zones. The remaining third are in the Eagle Ford. The company overall sees net unrisked resource potential of 1 billion boe.

Rosetta’s assets produced 66,000 boe/d in the first quarter and had yearend 2014 proved reserves of 282 million boe. More than 60% of Rosetta’s current production and proved reserves are liquids. Noble anticipates a compounded production growth rate from these assets over the next several years of 15%/year, generating positive free cash flow on an annual basis.

Rosetta shareholders in the deal will receive 0.542 of a share of Noble common stock for each share of Rosetta common stock held. Following the deal, Rosetta shareholders are expected to own 9.6% of Noble outstanding shares.

Both companies’ boards have unanimously approved the terms of the agreement, and Rosetta’s board has recommended that its shareholders approve the deal. Completion is subject to the approval of the Rosetta shareholders and certain regulatory approvals and customary conditions.

Noble’s US onshore acreage comprises core operations in the DJ basin and Marcellus shale (OGJ Online, Feb. 20, 2015). The company last week reported a first-quarter net loss of $22 million.