Noble Buys Clayton for $2.7 Billion to Expand in Permian

By Cody Laska,
Money and Investing Writer

For $2.7 billion in stock and cash, Noble will be adding 4,200 drilling locations and 120,000 acres to make their share of the Delaware Basin the second largest.
Expected to produce more than 2 billion barrels of oil, this basin in the Permian Shale formation is one of a few that managed to continue producing a profit in the 2008 downturn.

In making this acquisition, Noble is attempting to address a concern with their inventory; an issue that has been consistently driving their stock price down.
In a research note published to investors, a Citigroup analyst stated “Noble now holds over 2 billion barrels of resource potential in two of the most economic oil plays in North America – the D-J and Delaware Basins.”

Noble is aiming to produce 60,000 to 70,000 barrels of oil equivalent per day which would be a massive uptake from the original 10,000 that Clayton Williams was managing to put out.

This is a fair and reasonable goal as Noble has been in this basin since 2015 when it acquired Rosetta Resources and began to grow its current claim in the Delaware Basins.

The deal is expected to be closed and finalized towards the second quarter of this year contingent on basic regulatory checks and approval from shareholders.

The deal is valued out at $3.2 billion or roughly $139 per common share of Clayton Williams.

Noble will not be taking out additional debt for funding but will rely on their revolving debt facility, currently holding $4 billion that was untouched at the end of 2016.

Owners of Clayton Williams’ common stock will be compensated with roughly three shares of Noble plus $34.75 per share.

As energy companies in general see a decline in revenues as well as stock value, Noble is no exception.

As warmer than normal temperatures have lowered the demand for heating and a higher emphasis on renewable energy, oil and shale are not boding well.

However, this story has seen increases for both Noble and Clayton Williams; with Noble up 6 percent, their highest increase in six weeks, and a 40 percent gain for Clayton Williams, the largest gain in 19 years.

A version of this article appeared in the Tuesday, January 24th print edition.

Contact Cody at
cody.laska@student.shu.edu

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