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Noble Energy Sells GOM Deepwater Assets to Fieldwood Energy


Noble Energy, Inc. NBL announced that it has completed the sale of deepwater Gulf of Mexico assets to Fieldwood Energy LLC for $710 million. The agreement was signed in February.

For the Gulf of Mexico assets, Fieldwood Energy will pay $480 million in cash and assume liabilities of $230 million. The company will utilize proceeds from this divestment to fund a portion of its $750-million share repurchase program, which in turn will raise shareholders’ value.

Change in Strategy

Noble Energy has been focusing on portfolio transformation to strengthen cash flow and margin. Selling of the Gulf of Mexico is a major step undertaken by the company. Post the divestiture, the company will focus on the development of U.S onshore assets and Eastern Mediterranean.

The company is planning to strengthen & expand its production from Tamar field offshore Israel in Eastern Mediterranean region. Operations in Tamar supported by the Leviathan development is expected to improve margins that will provide a stable and long-term cash flow in the near future. The growing demand of natural gas in Eastern Mediterranean region will be fulfilled by extracting higher gas volumes from existing assets of the Tamar Field and the upcoming Leviathan development.

Other Acquisitions and Divestments

Recently, Cobalt International Energy Company’s several assets located in the Gulf of Mexico were acquired by Total SA TOT. The deal was valued at about $300 million.

Royal Dutch Shell plc RDS.A has divested its entire stake in Oman’s Mukhaizna oilfield to Indian Oil Corporation.

Price Performance

Shares of Noble Energy have underperformed the industry in the last 12 months. The company’s shares have lost 7.6%, compared with the industry’s decline of 7.0%.

Zacks Rank & Key Pick

Noble Energy carries a Zacks Rank #3 (Hold). Investors can consider Continental Resources, Inc. CLR as a better-ranked stock from the same industry. Continental Resources sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources reported an average positive earnings surprise of 64.93% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings moved up 1.3% to $2.40 in the last 60 days.

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