Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2019

Note 4. Acquisitions and Divestitures

Year Ended December 31, 2019

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

Asset Sale to Noble Midstream Partners In November 2019, we sold substantially all of our remaining midstream interests and assets to Noble Midstream Partners. The value of the transaction, which also included the sale of our incentive distribution rights, totaled approximately $1.6 billion, comprised of $670 million of cash and 38.5 million of newly issued Noble Midstream Partners common units, valued at approximately $930 million. Noble Midstream Partners funded the cash portion of the consideration through $420 million of borrowings on the Noble Midstream Services Revolving Credit Facility (defined below) and approximately $250 million in gross proceeds from a private placement of approximately 12 million common units. At closing, we owned approximately 56.5 million common units, or 63%, of the outstanding units of Noble Midstream Partners. We are subject to a post-closing 180-day lock-up period applicable to the common units received. Sales proceeds were used to repay amounts outstanding under our commercial paper program. As we continue to consolidate Noble Midstream Partners, the activities related to these assets will continue to be reflected within our Midstream segment.

Year Ended December 31, 2018

Divestiture of Gulf of Mexico Assets We sold substantially all of our Gulf of Mexico assets, including interests in producing properties and undeveloped acreage, for cash consideration of $480 million, along with the assumption, by the purchaser, of abandonment obligations associated with the properties sold. We recorded impairment expense of $168 million during first quarter 2018. We received net proceeds of approximately $384 million and recorded a loss of $24 million upon close.

Divestiture of 7.5% Interest in Tamar Field In first quarter 2018, we sold a 7.5% working interest in the Tamar field to Tamar Petroleum Ltd. (Tamar Petroleum), a publicly traded entity on the Tel Aviv Stock Exchange (TASE: TMRP). Total consideration included cash of $484 million and 38.5 million of Tamar Petroleum shares 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 $376 million. We incurred tax expense of $86 million in connection with the transaction.

The Tamar Petroleum shares were subject to certain temporary lock-up provisions and had no voting rights. Due to the lock-up provisions associated with the Tamar Petroleum shares, we initially attributed $190 million of fair value to the shares, or 15% less than the publicly traded value on the TASE. These shares were accounted for at fair value and we recorded decreases in fair value of $27 million and dividend income of $31 million during 2018. These amounts are included in other non-operating (income) expense, net, in our consolidated statements of operations. In fourth quarter 2018, we sold the Tamar Petroleum shares in over the counter transactions for pre-tax proceeds of $163 million, net of transaction expenses.

Divestiture of Southwest Royalties In January 2018, we sold our investment in Southwest Royalties, Inc., which we acquired in the 2017 acquisition of Clayton Williams Energy (Clayton Williams Energy Acquisition). We received proceeds of $60 million, resulting in no gain or loss recognition on the sale of these assets.

Divestiture of Greeley Crescent Assets In September 2018, we sold assets in the Greeley Crescent area of the DJ Basin and received proceeds of $68 million, resulting in no gain or loss recognition on the sale of these assets.

Divestiture of Non-Core Delaware Basin Acreage In December 2018, we sold certain non-core acreage in the Delaware Basin, receiving proceeds of $63 million, resulting in a pre-tax loss of $16 million.

DJ Acreage Exchange We closed a cashless acreage exchange in the DJ Basin receiving approximately 12,900 net undeveloped acres within core areas of our Mustang and Wells Ranch positions in exchange for approximately 12,300 net undeveloped acres in non-core areas of Mustang and Wells Ranch. No gain or loss was recognized.

Noble Midstream Partners Saddle Butte Acquisition In January 2018, Noble Midstream Partners and its partner formed Black Diamond Gathering LLC (Black Diamond) to acquire Saddle Butte Rockies Midstream, LLC and affiliates, which own a large-scale integrated gathering system located in the DJ Basin. Consideration for the acquisition totaled $681 million, which included $663 million of cash and assumption of $18 million of liabilities. Our partner funded approximately $343 million of the purchase price, which is reflected as a contribution from noncontrolling interest within our consolidated statement of shareholders' equity, and Noble Midstream Partners funded the remainder.

We accounted for the transaction as a business combination using the acquisition method and allocated the total purchase price to assets acquired and liabilities assumed based on the fair values at the acquisition date. Allocated fair values included: $206 million to property, plant and equipment; $340 million to customer-related intangible assets (acquired customer contracts); and $110 million to implied goodwill.

We own a 54.4% interest in Black Diamond and consolidate the entity as a VIE, reflecting the third-party ownership within noncontrolling interests in our consolidated statements of shareholders' equity.

Year Ended December 31, 2017

Clayton Williams Energy Acquisition We completed the Clayton Williams Energy Acquisition on April 24, 2017. Total consideration of $2.5 billion included cash consideration of $637 million and proceeds from the issuance of approximately 56 million shares of Noble Energy common stock with a fair value of approximately $1.9 billion. In exchange, we received all outstanding Clayton Williams Energy shares, including stock options, restricted stock awards and warrants.

In connection with the acquisition, we incurred acquisition-related costs of $100 million, including $64 million of severance, consulting, investment, advisory, legal and other merger-related fees and $36 million of noncash share-based compensation expense, all of which were expensed and are included in other operating expense, net in our consolidated statements of operations.

The transaction was accounted for as a business combination using the acquisition method. The allocation of the total purchase price of Clayton Williams Energy to the assets acquired and the liabilities assumed was based on the fair values at the

acquisition date, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill. The $1.3 billion of goodwill recorded as part of the transaction was fully impaired in fourth quarter 2018.

The results of operations attributable to Clayton Williams Energy are included in our consolidated statements of operations for 2019 and 2018. Revenues of $99 million and pre-tax net loss of $19 million were generated from Clayton Williams Energy assets during the period April 24, 2017 to December 31, 2017.

Marcellus Shale Upstream Divestiture In 2017, we sold all of our Marcellus Shale upstream assets, which were primarily natural gas properties. The sales price totaled $1.2 billion, and we received $1.0 billion of net cash proceeds, after consideration of customary closing adjustments. The sales price includes additional contingent consideration of up to $100 million structured as three separate payments of $33.3 million each for each annual period through 2020, should certain conditions be met. No amounts have been accrued related to the contingent consideration. Proceeds from the transaction were used to repay borrowings resulting from the Clayton Williams Energy Acquisition.

We recognized a loss on divestiture of $2.3 billion, or $1.5 billion after-tax, and recorded exit costs for retained financial commitments of $93 million, discounted. The aggregate net book value of the properties sold was approximately $3.4 billion, which included approximately $883 million of undeveloped leasehold cost.

After the property sale, we retained certain firm transportation commitments to flow Marcellus Shale natural gas production. See Note 11. Exit Cost – Transportation Commitments.

Other US Onshore Transactions We conducted the following additional transactions in 2017:


•	sold certain US onshore properties receiving total proceeds of $671 million, including $568 million related to divestment of non-core acreage in the DJ Basin. Proceeds were applied to reduce field basis with no recognition of gain or loss.


•	received $335 million and recognized a gain of $334 million on the sale of mineral and royalty assets covering approximately 140,000 net mineral acres concentrated primarily in Texas, Oklahoma and North Dakota.


•	acquired Delaware Basin properties, including seven producing wells, increasing our contiguous acreage position in the Reeves County, Texas area. Consideration totaled $301 million, approximately $246 million of which was allocated to undeveloped leasehold cost.

Asset Sale to Noble Midstream Partners In June 2017, we sold interests in certain midstream assets to Noble Midstream Partners for $270 million, which consisted of $245 million in cash and 562,430 Noble Midstream Partners common units. Noble Midstream Partners funded the cash consideration with approximately $138 million of net proceeds from a concurrent private placement of common units, $90 million of borrowings under the Noble Midstream Services Revolving Credit Facility and the remainder from cash on hand.

See Supplemental Oil and Gas Information (Unaudited) for discussion of proved reserves acquired or divested in connection with the above transactions.