Noble Energy (NYSE: NBL) is set to acquire Rosetta Resources (NASDAQ: ROSE) in a $2.1 billion transaction in which Rosetta Resources Operating LP will become a wholly owned indirect subsidiary of Noble. Once the transaction closes, which is expected July 20, Noble plans to close Rosetta’s headquarters in Houston. Eleven of Rosetta’s executives are expected to resign, and approximately 65 other jobs will be eliminated. The reduction will mainly affect Rosetta’s corporate-level staff, and not its field or operations personnel.
Rosetta’s assets include 50,000 net acres in the Eagle Ford shale play and 56,000 net acres in the Permian Basin (specifically, 46,000 acres in the Delaware Basin and 10,000 acres in the Midland Basin).
Noble Energy has said that, while some duplicated positions could be eliminated under the merger, it intends to hire many of Rosetta’s employees to help guide the company as it enters the Eagle Ford shale play and Permian Basin, where Noble, which has oil operations in the Denver-Julesburg Basin, has little experience.
In the merger agreement, Noble Energy will acquire all of the common stock of Rosetta in an all-stock transaction valued at $2.1 billion, plus the assumption of Rosetta's net debt of $1.8 billion as of March 31.
Rosetta’s assets produced 66 thousand barrels of oil equivalent per day in the first quarter of 2015, and year-end 2014 proved reserves were 282 MMboe. More than 60% of Rosetta’s current production and proved reserves are liquids.
Noble’s all-stock transaction for Rosetta Resources is a good deal for both companies, according to IHS analysis. For Noble, the deal price of $11.30 per barrel of Rosetta’s proved reserves of oil is a benchmark for other companies considering mergers or acquisitions. And Rosetta’s shareholders will now be part of a bigger company that is financially solid with a diverse portfolio, IHS said.