Independent producer Noble Energy said Friday after concluding its midstream review, it will retain and increase its ownership in Noble Midstream Partners (NBLX), Kallanish Energy reports.
As part of the decision, Houston-based Noble Energy will drop-down essentially all of its remaining U.S. onshore midstream interests and assets to Noble Midstream Partners, plus eliminate the company’s incentive distribution rights (IDRs), for $1.6 billion.
‘Significant midstream value’
“The transaction announced today highlights significant midstream value within Noble Energy, while simplifying the structure of Noble Midstream. Retaining ownership of these assets through the NBLX structure enhances our business with steady and growing cash flow with lesser volatility from commodity prices,” said David L. Stover, Noble’s chairman and CEO.
Primarily all of Noble Energy’s assets are located in the DJ and Delaware basins.
The remaining midstream gathering interests sold by Noble Energy to NBLX, include:
* A 60% working interest in the Delaware Basin gathering system, which services crude oil, natural gas, and water gathering
* A 75% working interest in the Mustang area (DJ Basin) gathering system, which services crude oil, natural gas, and water gathering, along with freshwater delivery
* A 75% working interest in the East Pony area (DJ Basin) gathering system, which services freshwater delivery
* A 100% working interest in the East Pony area (DJ Basin) natural gas gathering and processing system.
Owns 100% of gathering systems
NBLX now owns 100% of the interest in the above gathering systems. Noble Energy estimates the earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the assets sold to be roughly $160 million for 2020.
In addition, Noble estimates its incentive distribution rights (IDRs) divested would have resulted in total IDR distribution to Noble Energy in 2020 of roughly $40 million.
Noble Energy is receiving $1.6 billion from the transaction, including an estimated $670 million in cash and 38.5 million of newly issued common units of NBLX valued at $930 million based upon a 30-day volume weighted average price as of Nov. 6.
Enhancing operating synergies
“This financially-attractive acquisition of essentially all of Noble Energy’s remaining midstream assets will enhance operational synergies and increase economic alignment in Noble’s growth basins. The acquisition is expected to be accretive to distributable cash flow per unit,” said Brent J. Smolik, CEO of Noble Midstream.
Following the close of the deal, Noble Energy will own 56.5 million units, or roughly 63%, of the outstanding units of NBLX.
This post appeared first on Kallanish Energy News.