Noble Energy (NBL) soared to the top of the S&P 500 today after purchasing Clayton Williams Energy (CWEI) for $2.7 billion.
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Noble Energygained 7.1% to $40.05, while the S&P 500 fell 0.3% to2,267.89.
Wunderlich’s Irene Haas explains why she’s a fan of the deal:
Noble Energy (NBL) has agreed to acquire Clayton Williams Energy Inc. (CWEI-$103.98, Hold) for $3.4 billion. The transaction has been approved by both boards and should close during 2Q17. NBL will gain 71,000 net acres in Reeves County, production of 10,000 boepd, and 2,400 gross locations (with 8,000 lateral length) in the Wolfcamp, with net un-risked resource potential of over 1 billion boe. Netting out production, acreage outside of Reeves County, and midstream assets, NBL valued the Reeves County acreage at~$32,000 per net acre. NBL has the balance sheet and the technical expertise to develop the project quickly and generate meaningful production and cash flow growth. We reiterate our Buy rating on NBL.
Noble Energy’s market capitalization rose to $17.2 billion from $16.1 billion on Friday. It reported a net lossof $2.4 billion on sales of $3 billion in 2015.