Fieldwood buys Noble’s Gulf of Mexico assets for $710 million

U.S.-based oil company Noble Energy has executed an agreement to sell its deepwater Gulf of Mexico assets to compatriot Fieldwood Energy for a total value of $710 million.

Cash proceeds included in the transaction total $480 million, and Fieldwood will assume all abandonment obligations associated with the properties, which the company recorded at a book value of approximately $230 million as of December 31, 2017, Noble informed on Thursday.

In addition, a cumulative contingent payment of up to $100 million is payable to Noble Energy from closing of the transaction through the end of 2022, determined quarterly at a rate of $2 per barrel produced when the average Light Louisiana Sweet oil price exceeds $63 per barrel.

The effective date of the transaction is January 1, 2018, with closing anticipated during the second quarter 2018, contingent upon Fieldwood successfully implementing its contemplated restructuring process.

Included in the transaction is the company’s interest in six producing fields and all undeveloped leases. Noble Energy estimates net production from these assets for 2018 to average slightly more than 20 thousand barrels of oil equivalent per day for the year. Total proved reserves in the Gulf of Mexico as of year-end 2017 for the company were 23 million barrels of oil equivalent.

David L. Stover, Noble Energy’s Chairman, President and CEO, commented, “The sale of our Gulf of Mexico business represents the last major step in our portfolio transformation. This has been done to focus our go-forward efforts on those assets that will rapidly grow our cash flows and margins, primarily the U.S. onshore business and the Eastern Mediterranean.”

It is worth reminding that Noble Energy is the operator of the giant Leviathan gas field located offshore Israel. The company sanctioned the first phase of the Leviathan gas field development in February 2017. First gas from the field is scheduled for the end of 2019.

Noble also has interest in the Tamar field offshore Israel. The company in January 2018 sold a 7.5 percent stake in the field to Tamar Petroleum. Cash proceeds from this transaction will be utilized to support the capital investment in the company’s Leviathan development in the Mediterranean Sea.

Stover added: “Going forward, we are concentrating the company’s exploration capabilities on higher-impact opportunities that can drive substantial long-term value creation.”

Noble also on Thursday authorized a $750 million share repurchase program during the period of 2018 through 2020.

The U.S. Gulf of Mexico has been a part of the Noble Energy story for nearly half a century. Noble acquired its first offshore block in 1968. Noble moved into deepwater U.S. Gulf of Mexico 20 years ago, making its first deepwater discovery there in 2001 followed by first production in 2005.

Today, Noble has interest in eight producing fields in the Gulf of Mexico. The company also operates two deepwater production platforms offshore the Gulf of Mexico, Thunder Hawk and the Neptune Spar.

Offshore Energy Today Staff