Noble Energy to Buy Clayton Williams for $2.7 Billion


Jan. 18 2017, Updated 2:46 p.m. ET

Noble Energy’s CWEI acquisition

On January 16, 2017, Noble Energy (NBL) announced that it’s acquiring Clayton Williams Energy (CWEI) for $2.7 billion.

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Transaction highlights

The deal will add 71,000 net acres to NBL’s existing acreage in the core of the Southern Delaware Basin, specifically in Reeves and Ward counties in Texas. These areas are adjacent to NBL’s existing acreage of 47,200 net acres. The deal also includes 100,000 net acres in other parts of the Permian Basin.

Noble will also acquire 2,400 new drilling locations, bringing the total to 4,200 with more than 2.0 billion barrels of oil equivalent reserves.

David Stover, Noble Energy’s chief executive officer, said in a press release, “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.”

He added, “In addition to the benefits driven by larger scale, the midstream assets and planned buildout provide significant synergies and substantial dropdown potential in association with our ownership in Noble Midstream Partners.”

Noble Energy (NBL) announced the initial public offering of Noble Midstream Partners (NBLX) in early September 2016.

Additional details

Noble Energy will use a combination of stock and cash to pay for the transaction. Clayton Williams shareholders will receive ~2.8 shares of Noble Energy common stock and $34.75 in cash for each share they hold. That amounts to 55.0 million shares of Noble Energy stock and $665.0 million in cash.

Based on Noble Energy’s closing stock price on January 13, 2017, the deal amounts to $139 per Clayton Williams Energy share, or a total of $3.2 billion. That includes the assumption of $500.0 million in net debt.

Noble intends to fund the cash portion of the deal through a draw on its $4.0 billion revolving credit facility, which was untouched at the end of 2016.

NBL also plans to retire CWEI’s outstanding debt at or following the closing of the deal, which is expected to happen in 2Q17.


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