Noble Energy to buy Rosetta Resources for about $2bn

May 11, 2015 12:00 AM

Oil and natural gas producer Noble Energy Inc said it would acquire Rosetta Resources Inc for about $2 billion in stock, highlighting a consolidation being driven by a steep fall in global oil prices.

The deal will give Noble entry into the Eagle Ford Shale field and the oil and gas region of Permian Basin in Texas.

Rosetta shareholders will receive 0.542 Noble Energy shares for each share held, or $26.62 per share, based on Noble's closing price of $49.12 on Friday.

The offer represents a 38 percent premium to Rosetta's Friday close. The shares had lost nearly two-thirds of their value since June.

Rosetta shares rise as much as 30 percent to $25.21 in early trading on Monday. Noble's shares fell 5 percent.

Noble will also assume Rosetta's net debt of $1.8 billion as of March 31.

The company said it had identified more than 1,800 drilling locations across Rosetta's liquids-rich assets, consisting of 50,000 net acres in the Eagle Ford shale and 56,000 net acres in the Permian.

The assets have the potential to produce about 1 billion barrels of oil equivalent, Noble said.

"NBL has the balance sheet, the expertise, and the bandwidth to do a great job with these two properties," Irene Haas, an analyst with Wunderlich Securities Inc, said in a note.

Noble raised its 2015 production forecast last week, citing cost cuts and technical improvements.

"The purchase does add diversification into the Permian and Eagle Ford, which reduces NBL's exposure to Israel," Barclays analysts wrote in a note.

The company, which gets more than a third of its total sales volume from outside the United States, is facing opposition from Israel's competition regulator over its stake in offshore Leviathan gas field. Noble and Delek Group together hold 85 percent of the giant field.

Noble's deal for Rosetta, expected to close by the third quarter, is the latest acquisition triggered by the steep drop in global oil prices .

Royal Dutch Shell agreed last month to buy BG Group for 47 billion pounds ($70 billion).

Petrie Partners Securities LLC served as exclusive financial adviser to Noble Energy, while Skadden, Arps, Slate, Meagher & Flom LLP was its legal adviser.

Morgan Stanley acted as exclusive financial adviser to Rosetta and Latham & Watkins LLP was its legal adviser.

Up to Friday's close, Noble's shares had fallen nearly 37 percent since last June.

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