May 2, 2017 4 min read

Just three years ago, in March 2014, Noble Energy officials held a news conference to announce plans to take more than half of a 207,000-square-foot office building under construction in Southpointe.

The company, which at the time was a 50-50 joint venture partner in Marcellus Shale development and production with Consol Energy, moved into the building in early 2015, with about 200 employees.

On Tuesday, Noble announced it was divesting its upstream assets in the Marcellus in northern West Virginia and southern Pennsylvania to an undisclosed buyer for $1.225 billion.

The energy giant’s exit from the Marcellus assets – it will still retain its piece of the CONE midstream partnership with Consol – was presaged by several other moves it made during the past year.

By late 2015, as the natural gas bust in the Marcellus settled in, Noble announced it was reducing staff at its Southpointe operations by 45 people, and by the end of last year, it had officially ended its joint venture with Consol, after having scaled back its office space in Southpointe.

At the time of separation of the five-year-old joint venture, Consol took a 100 percent working interest in 306,000 acres in the Marcellus, with most of the assets in Pennsylvania.

Noble took a 100 percent interest in 363,000 acres in the shale field, mostly in West Virginia. Those assets were the bulk of the sale announced Tuesday.

According to a news release from the Houston-based energy company, the amount includes upfront cash of $1.125 billion and an additional contingent amount of $100 million, structured as three separate payments of $33.3 million. The contingent payments to the company are in effect should the average annual price realization at Dominion South (Appalachian Basin pricing) exceed $3.30 per million Btu in the individual annual periods from 2018 through 2020.

“The Marcellus has been a strong performer for Noble Energy over the last few years, which is a direct result of the success of our employees’ efforts,” said Noble CEO David L. Stover. “During the same time period, we have also significantly expanded the inventory of investment opportunities in our liquids-rich, higher-margin onshore assets, which has led us to now divest our Marcellus position.”

Included in the divestment is current production of approximately 415 million cubic feet of natural gas equivalent per day (88 percent natural gas) and a 100 percent working interest in approximately 385,000 acres. Total proved reserves as of year-end 2016 related to these assets were 1.5 trillion cubic feet of natural gas equivalent. In addition, the buyer will assume responsibility for as much as 430 million cubic feet of natural gas per day of the company’s firm transportation, established to support Marcellus upstream production.

The Marcellus acreage will retain its dedication to CONE Midstream for natural gas gathering. Noble Energy’s interest in CONE Midstream is not included in the transaction, which is expected to close by the end of the second quarter.

During a conference call to announce Consol’s first-quarter financial results, CEO Nick DeIuliis couldn’t shed any light on who the buyer of Noble’s assets might be, but said the sale is “a bullish indication” for Marcellus-produced natural gas because, he said, “half of the acreage ownership is in the hands of someone with plans for development.”

Meanwhile, Noble was turning its attention from Pennsylvania to West Texas.

The company said proceeds from the transaction will be used to pay down essentially all of the debt borrowings resulting from its earlier purchase of Clayton Williams Energy, which expanded its core Delaware Basin, which itself is a portion of the Permian Basin in Texas, which in the past year has become a hotbed of oil and gas production.

Noble Energy is an independent oil and natural gas exploration and production company with a diversified high-quality portfolio of both U.S. unconventional and global offshore conventional assets spanning three continents.