Acquisitions and Divestitures

3 Months Ended

Mar. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Acquisitions and Divestitures

Note 4. Acquisitions and Divestitures

We maintain an ongoing portfolio management program and have engaged in various transactions over recent years.

2019 Asset Transactions

Divestiture of Reeves County Assets In February 2019, we closed the sale of certain proved and unproved non-core acreage in the Delaware Basin totaling approximately 13,000 net acres in southwestern Reeves County, Texas. We received cash consideration of $131 million, recognizing no gain or loss on the sale.

EPIC Pipelines In first quarter 2019, Noble Midstream Partners exercised and closed options with EPIC Midstream Holdings, LP (EPIC) to acquire a 15% equity interest in EPIC Y-Grade, LP (EPIC Y-Grade), which is constructing the EPIC Y-grade pipeline from the Delaware Basin to Corpus Christi, Texas, and a 30% equity interest in EPIC Crude Holdings, LP (EPIC Crude Holdings), which is constructing the EPIC crude oil pipeline also from the Delaware Basin to Corpus Christi, Texas. Cash consideration totaled $227 million. These investments are accounted for using the equity method.

Also, on March 25, 2019, Noble Midstream Partners secured a $200 million preferred equity commitment from GIP to fund capital contributions to Dos Rios Crude Intermediate LLC, a subsidiary formed by Noble Midstream Partners to hold the 30% equity interest in EPIC Crude Holdings. GIP funded $100 million and the remaining $100 million is available for a one-year period, subject to certain conditions precedent. The preferred equity is perpetual and has a 6.5% annual dividend rate, payable quarterly in cash, with the ability to defer payment during the first two years following the closing. In addition, Noble Midstream Partners can redeem the preferred equity in whole or in part at any time for cash at a predetermined redemption price. GIP can request redemption of the preferred equity following the later of the sixth anniversary of the preferred equity closing or the fifth anniversary of the EPIC crude oil pipeline completion date at a pre-determined base return. Proceeds from the preferred equity issuance were used to repay a portion of outstanding borrowings under the Noble Midstream Services Revolving Credit Facility, which were drawn to fund its exercise of the option to invest in EPIC Crude Holdings. See Note. 2 Basis of Presentation and Note 13. Fair Value Measurements and Disclosures.

Delaware Crossing Joint Venture In February 2019, Noble Midstream Partners executed definitive agreements with Salt Creek Midstream LLC (Salt Creek) to form a 50/50 joint venture, Delaware Crossing LLC (Delaware Crossing), to construct a 160 MBbl/d day crude oil pipeline system in the Delaware Basin. As Salt Creek had commenced construction of the pipeline prior to formation of the joint venture, Noble Midstream Partners made capital contributions of $38 million at closing. This investment is accounted for using the equity method.

Other Divestitures, Net In first quarter 2019, we also closed the sales of certain other non-core US onshore properties which resulted in net payments of approximately $8 million.

2018 Asset Transactions

Divestiture of Gulf of Mexico Assets  In February 2018, we announced plans to sell our Gulf of Mexico assets for cash consideration of $480 million, along with the assumption, by the purchaser, of all abandonment obligations associated with the properties. As of March 31, 2018, we reduced the net book value of the Gulf of Mexico assets to $480 million. In addition, we retained certain transaction related obligations approximating $92 million which were subsequently settled upon closing. During first quarter 2018, we recorded impairment expense of $168 million associated with these assets held for sale. The transaction closed in second quarter 2018.

Divestiture of 7.5% Interest in Tamar Field In March 2018, we closed the sale of a 7.5% working interest in the Tamar field to Tamar Petroleum Ltd., a publicly traded entity on the Tel Aviv Stock Exchange (Tamar Petroleum, TASE: TMRP). Total consideration included cash of $487 million and 38.5 million shares of Tamar Petroleum that had a publicly traded value of $224 million. Total consideration received from the sale was applied to the field's basis and resulted in the recognition of a pre-tax gain of $386 million and tax expense of $90 million.

In October 2018, we sold our shares in Tamar Petroleum. The sale was in accordance with the terms of the Israel Natural Gas Framework and completed our obligation to reduce our ownership interest in the Tamar field from 32.5% to 25% by year-end 2021.

Divestiture of Southwest Royalties In January 2018, we closed the sale of our investment in Southwest Royalties, Inc. We received proceeds of $60 million, recognizing no gain or loss on the sale.

Divestiture of Marcellus Shale CONE Gathering In January 2018, we closed the sale of our 50% interest in CONE Gathering LLC (CONE Gathering) to CNX Resources Corporation. CONE Gathering owns the general partner of CNX Midstream

Partners LP (CNX Midstream Partners, NYSE: CNXM). We received proceeds of $308 million in cash and recognized a pre-tax gain of $196 million. After the sale, we held 21.7 million common units, representing a 33.5% limited partner interest, in CNX Midstream Partners, which were subsequently divested in 2018.

Noble Midstream Partners Saddle Butte Acquisition In January 2018, Noble Midstream Partners acquired a 54.4% interest in Black Diamond Gathering LLC (Black Diamond), an entity formed by Black Diamond Gathering Holdings LLC, a wholly-owned subsidiary of Noble Midstream Partners, and Greenfield Midstream, LLC (Greenfield), which completed the acquisition of Saddle Butte Rockies Midstream, LLC and affiliates (collectively, Saddle Butte) from Saddle Butte Pipeline II, LLC. Saddle Butte owned a large-scale integrated gathering system, located in the DJ Basin, which we subsequently renamed the Black Diamond gathering system. Consideration totaled $681 million and Black Diamond is consolidated as a VIE.

We accounted for the transaction as a business combination using the acquisition method. The total purchase price was allocated to assets acquired and liabilities assumed based on acquisition date fair values, and we recognized goodwill for the amount of the purchase price exceeding the fair values of the identifiable net assets acquired. The final purchase price allocation included: $206 million to property, plant and equipment; $340 million to customer-related intangible assets (acquired customer contracts); and $110 million to implied goodwill.

Other Divestitures, Net In first quarter 2018, we also closed the sales of other non-core US onshore properties and received net cash consideration of approximately $10 million, recording a gain of $6 million.