Noble Energy Sells 50% Stake In CONE Gathering For $305M

Noble Energy (NYSE:NBL) has completed the sale of its 50% stake in CONE Gathering LLC for $305 million. CONE Gathering owns the general partner of CONE Midstream Partners LP.

Noble Energy retained its 21.7 million common limited partner units and plans to maximize value through the divestment of the units over the next few years. Notably, the deal was announced last year.

Divestitures

Noble Energy has been divesting its non-core assets and increasing focus on the U.S. on-shore operations. A substantial portion of its 2017 net proceeds from the sale were utilized to reduce debts, and support its high-margin and high-return assets.

In November 2017, Noble Energy signed a definite agreement to divest nearly 30,200 net acres of company’s non-core DJ Basin portion to SRC Energy Inc, for $608 million. The sale of acreage is in its Greeley Crescent and Bronco development areas, which are not likely to be developed by the company for a number of years. The sales proceeds in a way will help Noble Energy to develop its core assets and strengthen its balance sheet.

Long-Term Plans

Noble Energy has been investing to expand its on-shore U.S. operations through organic and inorganic means. Nearly 80% of its capital expenditure was directed to strengthen its U.S. operation and 20% to its Leviathan development in Israel.

The acquisition of Rosetta Resources has enhanced the company’s presence in the resource-rich Eagle Ford Shale and Permian Basin. Noble Energy has completed the acquisition of Clayton Williams Energy, Inc. and further strengthened its position in onshore United States. The company expects its production volumes to improve due to higher number of wells brought online in the DJ Basin, Eagle Ford and the Delaware area.

Leviathan natural gas project offshore Israel is expected to produce gas by end of 2019. The increasing demand for natural gas in Eastern Mediterranean region will be a ready market for the natural gas produced from Leviathan.

Price Movement

Shares of Noble Energy have outperformed the industry last month. The company’s shares have gained 16.5% compared with the industry’s rally of 9.6% in the same time frame.

Noble Energy continues to benefit from solid production from its organic and inorganic assets and is likely to gain from improving demand in the domestic and international arena.

Zacks Rank & Key Picks

Noble Energy currently carries a Zacks Rank #3 (Hold). Investors can consider better-ranked stocks from the same industry like Northern Oil and Gas, Inc. (NYSE:NOG) , Rice Midstream Partners LP (NYSE:RMP) and Pioneer Natural Resources Company (NYSE:PXD) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Northern Oil reported an average positive earnings surprise of 175% in the last four quarters. Its 2018 Zacks Consensus Estimate improved to earnings of 8 cents from a loss of 8 cents in the last 90 days.

Rice Midstream Partners reported an average positive earnings surprise of 35.3% in the last four quarters. Its 2018 Zacks Consensus Estimate for earnings moved up 13.3% to $1.79.

Pioneer Natural Resources reported an average positive earnings surprise of 67.2% in the last four quarters. Its 2018 Zacks Consensus Estimate for earnings moved up 36% to $3.55.

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