Noble, Anadarko Swap Land, Assets In The Wattenberg

Noble Energy Inc. (NYSE: NBL) and Anadarko Petroleum Corp. (NYSE: APC) have agreed to swap 50,000 net acres each in the Wattenberg area of northern Colorado.

As part of the deal, Noble was reimbursed $202 million for capital spent to drill and complete wells on the acreage conveyed to Anadarko. That was partially offset by other adjustments, which determined the $105 million cash Noble received at closing.

The trade consolidates acreage, centralizes operations and should allow for quicker development of longer laterals in area for both parties, Tudor, Pickering, Holt & Co. said.

For Anadarko, the acreage exchange enhances its core development area while retaining the benefits of its Land Grant mineral ownership on approximately 21,000 acres of the lands to be conveyed to Noble. The trade also will increase Anadarko’s daily production by approximately 8,000 barrels of oil equivalent based per day (BOE/d) on current production levels.

Noble’s net production will fall a corresponding 8,000 BOE/d, almost entirely related to the recently drilled wells.

Noble said the short-term reduction in production is anticipated to be quickly offset with operational efficiencies and cost savings. For 2014, the company’s Denver-Julesburg Basin volumes are still expected to grow at a rate of at least 20%.

The transaction will create “numerous synergies for both Noble Energy and Anadarko and allows us to maximize the value of this premier oil asset as acreage is consolidated in key operating areas,” David L. Stover, Noble Energy’s president and CEO said. “As we move forward with our integrated development plans within the DJ Basin, we expect to realize significant efficiency improvements including centralized field facilities, streamlined operations and reduced land work.”

Large contiguous acreage blocks will provide the opportunity to optimize drilling activities and add more extended-reach lateral wells to the program, Stover said.

The Wattenberg trade unlocks significant additional value for both companies through consolidation, said Chuck Meloy, Anadarko executive vice president, U.S. onshore exploration and production. “The trade is expected to achieve greater operating efficiencies, reduce costs and local impacts, and further improve safety performance.

“This exchange also demonstrates Anadarko’s active portfolio management and commitment to accelerating cash generation, as we anticipate increasing activity on our core Wattenberg acreage, where we are generating rates of return that exceed 100%.”