Noble Energy To Buy Clayton Williams Energy For $2.7 Bln In Stock And Cash

(RTTNews) - Noble Energy Inc. (NBL) and Clayton Williams Energy Inc. said that the Boards of Directors of both companies have approved and the companies have executed a definitive agreement under which Noble Energy will acquire all of the outstanding common stock of Clayton Williams Energy for $2.7 billion in Noble Energy stock and cash.

Clayton Williams Energy shareholders will receive 2.7874 shares of Noble Energy common stock and $34.75 in cash for each share of common stock held. In the aggregate, this totals 55 million shares of Noble Energy stock and $665 million in cash. While the aggregate amount of cash and stock in the transaction will not change, on an individual basis shareholders will be able to elect to receive cash or stock, subject to proration.

The value of the transaction, based on Noble Energy's closing stock price as of January 13, 2017, is approximately $139 per Clayton Williams Energy share, or $3.2 billion in the aggregate, including the assumption of approximately $500 million in net debt.

The per share consideration represents a 21% premium to the average closing share price of Clayton Williams Energy over the past 30 days, and a 34% premium to the price on January 13, 2017, the last day of trading prior to the transaction.

Noble Energy intends to fund the cash portion of the acquisition through a draw on its revolving credit facility. As of the end of 2016, the Company's $4 billion facility was completely undrawn. Through ongoing portfolio management / optimization, Noble Energy anticipates the Company will generate in excess of $1 billion in proceeds in 2017.

The company also anticipates retiring outstanding debt of Clayton Williams Energy assumed as part of the transaction at or following the closing. This, along with general and administrative cost elimination, will result in annual cost synergies to Noble Energy of approximately $75 million.

Funds managed by Ares Management, L.P., which owned approximately 35% of the outstanding shares of Clayton Williams Energy as of December 31, 2016, have entered into a support agreement to vote in favor of the transaction. Following completion of the transaction, shareholders of Clayton Williams Energy are expected to own approximately 11% of the outstanding shares of Noble Energy.

Closing is expected in the second quarter of 2017 and is subject to customary regulatory approvals, approval by the holders of a majority of Clayton Williams Energy common stock, and certain other conditions.

Noble Energy provided an update to its four-year operating plan (2016 - 2020E). The updated plan includes the development of the acquired acreage, which is estimated to result in production growth from approximately 10 MBoe/d currently to 60 MBoe/d in 2020 in the Company's base plan and to 70 MBoe/d in the upside plan. Rig activity on the new acreage is planned to accelerate from 1 rig currently to 3 rigs by year end 2017 and between 5 rigs (base plan) and 6 rigs (upside plan ) in 2020.

Noble Energy's base plan utilizes $50 per barrel WTI and Brent and $3 per thousand cubic feet Henry Hub natural gas for 2017, with modest oil price acceleration through 2020. The upside plan adds $10 per barrel in commodity price to all periods.

With the anticipated closing of the transaction in the second quarter of 2017, Noble Energy now anticipates an incremental $150 million in reported 2017 capital to be allocated to the Delaware Basin, bringing total Delaware Basin reported capital in 2017 to approximately $500 million. Noble Energy's total reported capital program for 2017, excluding Noble Midstream Partners' capital, is now estimated to total between $2.1 and $2.5 billion. Total reported company sales volumes for 2017 are now estimated at 410 to 420 MBoe/d.