Noble Energy (NBL) To Sell Marcellus Assets To Quantum Energy

Noble Energy (NYSE:NBL) announced that it will sell its stake in CONE Gathering LLC for $765 million cash to Quantum Energy Partners. The U.S. oil and gas producer has 50% stake in privately held CONE Gathering LLC.

Terms of the Sale

Per the terms of the sale, Noble Energy will hand over its 50% interest in CONE Gathering along with 21.7 million common and subordinated limited partnership units to Quantum Energy Partners. The 21.7 million limited partnership units represent 33.5% ownership Noble Energy in CONE Midstream Partners LP (NYSE:CNNX) .

CONE Gathering and CONE Midstream has midstream operations in the Marcellus Shale region. By selling its interest in these two firms, Noble Energy is letting go its Marcellus Midstream exposure.

Shifting Focus to Low-Cost Basins

Noble Energy is looking forward to shift focus to oil-rich basins where drilling cost is low. Though the price of oil is on a rebound, most of the Oil and Gas - Exploration and Production companies of the United States are tilting towards onshore oil development to reduce the cost of production.

Earlier this month, the company announced that it will sell all its upstream assets in northern West Virginia and southern Pennsylvania for $1.22 billion. The company wants to use the proceeds from these two transactions to pay off a part of Clayton Williams Energy acquisition expenses.

Clayton Williams Energy will enable Noble Energy to achieve its onshore U.S. oil production growth target of 30% by the end of 2020.

The company has been actively trying to bring down its operating expenses. For the quarter ended Mar 2017, the operating expenses were reported at $1,001 million, down by 12.7% against the year ago quarter.

Another Oil-Focused Company

Another independent oil and gas operator WPX Energy Inc. (NYSE:WPX) decided to increase its presence in the resource-rich Delaware Basin through the acquisition of assets from Panther Energy Company II, LLC and Carrier Energy Partners, LLC. The deal which allowed WPX Energy to add about 32,000 net acres in the core of the Delaware Basin at an average cost of $18,600 per acre was valued at $775 million. (Read more: WPX Energy to Grow Oil Output with Added Acreage in Delaware)

Price Movement

In the last six months, shares of Noble Energy lost 14.8% as compared to the Zacks categorized Oil and Gas - Exploration and Production – United States Industry’s loss of 17.7%.

Total sales volumes of the company for the quarter ended Mar 2017 saw a decline of about 8.2% year over year to 382 thousand barrels of oil equivalent per day (MBoe/d) from 416 MBoe/d. The decrease in volume was primarily due to the decline in United States Onshore sales volume.

Zacks Rank and Stock to Consider

Noble Energy currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same space is W&T Offshore, Inc. (NYSE:WTI) , carrying a Zacks Rank 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

W&T Offshore, Inc. delivered a positive earnings surprise of 77.78% in the first quarter. Its Zacks Consensus Estimate for 2017 moved from a loss 20 cents to an earnings of 15 cents per share in the last 90 days.

Zacks' Hidden Trades

While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?

Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.

Click here for Zacks' secret trade>>