Noble Energy has agreed sell all its natural gas production assets in the Marcellus shale field for $1.225bn.

The company did not reveal the name of the buyer. Noble Energy's interest in CONE Midstream Partners, which owns natural gas pipelines, was not part of the transaction.

Noble Energy will use the proceeds from the transaction to reduce its debts coming from last week’s $665m acquisition of Clayton Williams Energy which was done to expand its position in the Delaware Basin.

The latest divestiture will mark Noble Energy's exit from the Marcellus shale assets while it focuses mainly on building an onshore portfolio on liquids basins.

As per the terms of the deal, the Texas-based oil and natural gas exploration and production company will be paid an upfront amount of $1.125bn along with a contingent sum of $100m divided into three separate payments of $33.3m each.

It will be entitled to the contingent payments if the average annual price realization at Dominion South is more than $3.30 per million Btu in the individual annual periods from 2018 to 2020. 

Noble Energy chairman, president and CEO David L. Stover said: "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. 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.

“This enables us to further focus our organization on our highest-return areas that will deliver industry-leading US onshore volume and cash flow growth. This transaction also provides proceeds already exceeding our target for 2017, with several opportunities for additional proceeds ahead of us this year."

Noble Energy’s divestiture includes the existing production of around 415 million cubic feet of natural gas equivalent per day along with its complete working interest in about 385,000 acres.

The total proven reserves associated with the divested assets were 1.5 trillion cubic feet of natural gas equivalent as of 2016.

The buyer will be responsible for up to 430 million cubic feet of natural gas per day of the Texas company’s firm transportation, set up to support the upstream production of the Marcellus assets.


Image: Noble Energy’s Marcellus Shale. Photo: courtesy of Noble Energy Inc.