Noble Energy divests from non-core DJ Basin acreage

By Patrick C. Miller | November 14, 2017

Houston-based Noble Energy Inc. has signed an agreement with SRC Energy Inc.—an E&P company in Denver—to divest about 30,000 acres from its non-core DJ Basin position in Weld County, Colorado.

The transaction’s total value is $608 million and includes acreage containing estimated production of 4,100 barrels of oil equivalent per day. Noble says its DJ Basin activities will be focused on the northern and eastern parts of the basin for the next several years. Approximately 50 percent of the acreage is located in the company's Greeley Crescent area and the remainder is in the Bronco area. 

"This sale of acreage in our Greeley Crescent and Bronco development areas represents an acceleration of value as it was not likely to be developed by us for a number of years,” said Gary Willingham, Noble’s executive vice president of operations. “Our DJ Basin activities, both now and for several years to come, will remain focused on the northern and eastern parts of the basin. “

These parts of the basin are oilier with a deep inventory of long lateral drilling opportunities, Willingham explained, adding that the infrastructure provides the company with a competitive advantage.

“Proceeds from this transaction continue to highlight a strong market valuation for our DJ Basin position and will be prioritized to further strengthen our investment-grade balance sheet," he said.

The transaction became effective Nov. 1 and is anticipated to close on two separate dates, with acreage and non-operated production included in the initial closing by the end of 2017. That will be followed by a second closing for operated producing properties by mid-2018. The initial closing represents more than 90 percent of the total transaction value.

Non-operated production associated with the transaction totals approximately 2,500 barrels of oil equivalent per day (boepd). Operated production, assumed at the time of the second closing, is estimated to be 1,600 boepd. 

The commodity mix of the production divested is 20 percent oil, 30 percent natural gas liquids and 50 percent natural gas. The acreage and production divested represent approximately 8 percent and 4 percent, respectively, of Noble’s totals in the DJ Basin.  Post transaction close, the company’s DJ Basin position will be approximately 335,000 net acres.