Noble Energy to Buy Oil and Gas Company Clayton Williams--Update

By Lynn Cook

Noble Energy Inc. will pay $2.7 billion to buy Clayton Williams Energy Inc. in a deal that will give it a combined 120,000 acres of oil-rich property in West Texas.

The combination will create the energy industry's second-largest Southern Delaware shale acreage position in the Permian Basin. Noble is buying more than 2,400 new drilling locations, giving it a total of 4,200 with over 2 billion barrels of oil equivalent in reserves, the company said Monday.

The agreement also calls for Noble to take over a significant number of pipelines in Texas that can carry fuel from oil fields near the New Mexico border to markets where refineries and oil storage tanks are located.

As drilling in the Permian Basin heats up this year, pipeline space is expected to become more valuable, experts say. The Permian is a giant oil-rich swath of West Texas and New Mexico that spans more than 75,000 square miles, making it roughly the size of the tri-state area of New York, New Jersey and Connecticut combined.

Within the Permian Basin, there are many layers of shale rock, and some have proved to contain vast deposits of crude oil. The Delaware formation within the Permian is one of those areas. Clayton Williams Energy has spent the last two years shedding oil-and-gas assets outside of the Delaware formation and investors have rewarded it. The stock has soared more than 530% in the past year to a recent $103.98 a share.

Noble's stock is up more than 35% over the past 12 months and closed Friday at $37.39 a share.

Terms of the deal call for Noble to acquire all the outstanding common stock of Clayton Williams Energy using Noble stock and cash.

David L. Stover, Noble's chairman and chief executive, said the company would add rigs to drill more in the area this year, starting with four rigs and boosting that to six by the fourth quarter.

"We are rapidly accelerating activity in 2017," he said. "This is an excellent fit for Noble Energy, and we expect the transaction to generate substantial shareholder value."

Last week Noble closed a $300 million deal that added 7,200 acres to the company's Southern Delaware Basin position in Reeves County, Texas, which are adjacent to other oil leases it has in the area.

Other energy deals have been heating up in West Texas, too, as the price of oil hangs over $50 a barrel.

Last week Anadarko Petroleum Corp. completed a deal to sell oil and gas properties to Sanchez Energy Corp. and Blackstone Group LP for $2.3 billion. In September EOG Resources Inc. agreed to acquire Yates Petroleum Corp. for $2.3 billion.

Write to Lynn Cook at lynn.cook@wsj.com

(END) Dow Jones Newswires

January 16, 2017 16:36 ET (21:36 GMT)

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