CONSOL Energy (CNX), Noble Energy (NBL) to Separate Marcellus Shale Joint Venture

October 31, 2016 6:48 AM EDT

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CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL) jointly announced that the two companies have entered into a definitive agreement to separate their Marcellus Shale 50-50 Joint Venture (the "Exchange Agreement"). The two companies have negotiated a separation of the Joint Venture that was formed in 2011 for the exploration, development, and operation of primarily Marcellus Shale properties in Pennsylvania and West Virginia. Highlights of the Exchange Agreement include:

  • Each party will own and operate a 100% interest in its properties and wells in two separate operating areas;
  • Each party will have independent control and flexibility with respect to the scope and timing of future development over its operating area;
  • All acreage operated by CONSOL Energy and Noble Energy, Inc. in their respective operating areas will remain fully dedicated to CONE Midstream Partners LP (NYSE: CNNX) ("CONE").

"This agreement with Noble Energy to separate our Joint Venture is bitter sweet for CONSOL Energy," commented Nicholas J. DeIuliis, president and CEO. "Noble has been a top-notch partner, and we have enjoyed the collaborative relationship that we have shared over the past five years. Even though we have seen much success together, we have agreed that we must both have the ability to adapt to a changing energy landscape. The separation of the Joint Venture is consistent with CONSOL's transitional journey to a pure-play exploration and development company, and the company's commitment to future growth, in what is now a more robust and actionable stacked pay opportunity set. As the parties work towards closing, CONSOL will remain focused on conducting operations in a safe and environmentally compliant manner to maximize value to our shareholders."

David L. Stover, Chairman, President and CEO of Noble Energy, Inc., added, "The accomplishments of our Joint Venture over the last five years are outstanding, including significant increases in combined production and recoverable resources. These outcomes are a direct result of the high-quality nature of the acreage, but even more so a result of the combined technical leadership and coordination between our two companies. Today's agreement between CONSOL Energy and Noble sets a clear path for both companies into the future. It provides us with greater control and flexibility over the future pace of development in the Marcellus. I'd like to personally thank all of the CONSOL Energy team for their hard work and congratulate them on the successes we have had together."

Prior to the Exchange Agreement, the Joint Venture collectively operated approximately 669,000 Marcellus acres. CONSOL Energy and Noble Energy, Inc. each held 50% working interest. As of the effective date of the Exchange Agreement on October 1, 2016, total flowing production to the Joint Venture was 1.07 billion cubic feet per day of natural gas equivalents.

Subsequent to closing of the Exchange Agreement, the acreage and production of the prior Joint Venture will be as follows:

  • CONSOL Energy will operate a 100% working interest in approximately 306,000 Marcellus acres with associated production of approximately 620 million cubic feet per day of natural gas equivalents. The majority of the acreage operated by CONSOL Energy resides in Pennsylvania.
  • Noble Energy, Inc. will operate a 100% working interest in approximately 363,000 Marcellus acres with associated production of approximately 450 million cubic feet per day of natural gas equivalents. The majority of the acreage operated by Noble Energy, Inc. resides in West Virginia.

Maps reflecting the new acreage positions for each company are available on each Company's website.

In addition to the acreage and production realignment between the two companies, Noble Energy, Inc. will also remit a cash payment of approximately $205 million to CONSOL Energy at closing. The exchange of properties and cash result in the elimination of the remaining outstanding carry cost obligation due from Noble Energy, Inc. to CONSOL Energy.

While the Exchange Agreement creates independent ownership interests in the acreage and production currently gathered by CONE, it does not change the total acreage dedicated to CONE, the gathering rates, or other fundamental terms for the services provided by CONE. CONSOL Energy and Noble Energy, Inc. remain as co-sponsors of CONE and shippers on CONE's gathering systems, while retaining their respective general partnership and limited partner ownership interests in CONE.

Completion of the Exchange Agreement is subject to a number of conditions, including expiration of the Hart Scott Rodino Antitrust Improvements Act waiting period and other customary conditions. The closing of the Exchange Agreement is not subject to a financing condition and is expected to close in the fourth quarter of 2016.

Conference Call Information

CONSOL Energy will host a conference call today at 10:00am ET. A live webcast of the conference call can be accessed at the investor relations section of the company's website, at www.consolenergy.com. Security analysts and institutional investors may also listen by dialing (US) 800-230-1074 or (Intl.) 612-234-9960, with access code 405600. A slide presentation summarizing the transaction may be accessed at www.consolenergy.com.

Third Quarter Earnings Call Information

CONSOL Energy will hold its third quarter earnings webcast on November 1, 2016, at 10:00am ET (9:00 a.m. CT), which can be accessed through its website.

Noble Energy, Inc. will hold its third quarter earnings webcast on November 2, 2016, at 9:00am ET (8:00 a.m. CT), which can be accessed through its website.



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