Noble Energy Inc. (NYSE:NBL) has signed a definitive agreement to divest the holding company which owns a 50% interest in CONE Gathering LLC and 21.7 million common and subordinated limited partnership units to a portfolio company of Quantum Energy Partners for total cash consideration of $765 million. The limited partnership units represent a 33.5% ownership interest in CONE Midstream Partners LP (NYSE:CNNX). CONE Gathering owns the general partner of CONE Midstream.
David L. Stover, Noble Energy's Chairman, President and CEO, commented "CNNX has performed exceptionally well since its IPO in late 2014, exceeding forecasts despite a challenging macro-economic backdrop. Including this transaction, Noble Energy will realize more than $1 billion in total value from our Marcellus midstream business, which represents approximately three times our net invested capital. Going forward, our midstream efforts are focused on Noble Midstream Partners, supporting our DJ Basin and Delaware Basin growth areas."
Noble Energy's cumulative 2017 divestiture proceeds total approximately $2 billion, with the amount primarily representing an exit of the company's Appalachia upstream and midstream businesses. Proceeds announced year-to-date are being utilized to cover the cash costs associated with the Clayton Williams Energy acquisition, to reduce debt, and to provide additional financial capacity to support the company's US onshore oil development.
Closing of the transaction is anticipated in the third quarter this year, subject to customary closing conditions and adjustments. BofA Merrill Lynch acted as the sole financial advisor to Noble Energy on the CONE Midstream transaction and Vinson & Elkins LLP served as legal counsel.
In a note following the news, Raymond James analysts said: "While not a huge needle mover, we like the move from a strategic standpoint, as the transaction allows the company to continue to hone its focus in on more oily upstream assets as well as focus on Noble Midstream Partners (NBLX) on the midstream side."