e8vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 17, 2011
NOBLE ENERGY, INC.
(Exact name of Registrant as specified in its charter)
|
|
|
|
|
Delaware
|
|
001-07964
|
|
73-0785597 |
|
|
|
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
Commission
File Number
|
|
(I.R.S. Employer
Identification No.) |
|
|
|
|
|
100 Glenborough Drive, Suite 100
Houston, Texas
(Address of principal executive offices)
|
|
|
|
77067
(Zip Code) |
Registrants telephone number, including area code: (281) 872-3100
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
|
|
|
Item 1.01. |
|
Entry into a Material Definitive Agreement. |
Noble Energy, Inc., a Delaware corporation (the Company), and CNX Gas Company LLC
(the CNX), a Virginia limited liability company and subsidiary of CONSOL Energy Inc., a
Delaware company ( CONSOL), have entered into an Asset Acquisition Agreement, dated August
17, 2011 (the Acquisition Agreement). Pursuant to the terms of the Acquisition Agreement,
at closing, CNX will transfer to the Company (a) 50% (the Conveyed Interests) of CNXs
undivided interest in certain Marcellus Shale oil and gas assets and properties in West Virginia
and Pennsylvania covering approximately 663,350 net acres (the Marcellus Assets) in
exchange for approximately $1.07 billion in cash, payable in three equal installments (with the
first installment due at closing of the Acquisition Agreement and the following two installments
paid at the first and second anniversary of closing, respectively) and (b) 50% of CNXs undivided
interest in certain of its existing Marcellus Shale oil and gas wells in exchange for $160 million
cash, payable at closing, in each case, subject to certain customary adjustments.
At the closing, the Acquisition Agreement provides that the Company and CNX will also enter
into a Joint Development Agreement (the
JDA) pursuant to which the Company and CNX will
agree to jointly develop the Conveyed Interests with CNXs remaining 50% undivided interest in the
Marcellus Assets and any other Marcellus oil and gas interests that are jointly acquired by the
Company and CNX after the closing (collectively referred to herein as the Subject
Assets), with the Company being the designated operator of the wet gas areas and CNX being the
designated operator of the dry gas areas. During an initial transition period, CNX will operate all
of the Subject Assets until the Company is able to take over operations in the wet gas areas. Under
the terms of the JDA, the Company will agree to pay one-third of CNXs working interest share of
certain drilling and completion costs with respect to the Subject Assets, up to approximately $2.13
billion (the
Carried Costs). The Carried Costs will be paid by the Company as wells are
drilled on the Subject Assets. The Companys obligation to pay the Carried Costs will be limited to
$400 million in each calendar year and will be suspended if average natural gas prices fall and
remain below $4.00/MMBtu in any three consecutive month period and will remain suspended until
average natural gas prices are above $4.00/MMBtu for three consecutive months. Except for the
Subject Assets that are already subject to joint operating agreements with third parties, the
operation of the Subject Assets will be governed by an agreed upon form of joint operating
agreement. During the term of the JDA, a Joint Development Committee (the Committee) will
generally oversee operations in the AMI (as defined below) and approve certain matters specified in
the JDA. The Committee will initially consist of an equal number of members from the Company and
CNX, with all decisions, approvals and other actions of the JDA to be decided by the affirmative
vote of at least two-thirds of the committee members. The JDA also contains transfer restrictions
on each of the Companys and CNXs ability to transfer their respective interests in the Subject
Assets. The JDA also contains an area of mutual interest provision covering each of the counties in
Pennsylvania and West Virginia in which the Subject Assets are located (the AMI). The JDA
will terminate on the earlier to occur of the mutual agreement of the parties or 60 days following
the day on which the Company satisfies its obligations to pay the Carried Costs.
The cash payments due under the Acquisition Agreement, as well as the Companys Carried Costs
obligation, are subject to certain adjustments, including certain closing adjustments for certain
material environmental conditions relating to the Conveyed Interests and certain post-closing
adjustments for certain material defects in CNXs title to the Marcellus
Assets.
The Company and CNX have also agreed to form a gathering company to provide gathering lines
and facilities to receive and deliver production from the existing Marcellus Shale wells and future
wells on the Subject Assets. The Company and CNX will each own 50% of the new gathering company.
Upon formation of the new gathering company, the Company will contribute approximately $59 million
in cash to the new gathering company and CNX will contribute its existing gathering assets to the
new gathering company valued at approximately $118 million, and the new gathering company will make
a special cash distribution of approximately $59 million to CNX (the Gathering
Transaction). The Company and CNX have agreed in principle to the primary terms for the
Gathering Transaction and expect to finalize the definitive agreements for the Gathering
Transaction prior to closing.
Closing of the Acquisition Agreement is subject to certain customary closing conditions
including, among others, a condition to both parties obligation to close that title defects,
environmental defects and adjustments made for preferential purchase rights and consents to assign
do not exceed a certain amount, and a condition to CNXs obligation to close that it receive the
consent of the holders of a majority in principal amount of each of CONSOLs outstanding 8.00%
Senior Notes due 2017, 8.25% Senior Notes due 2020 and 6.375% Senior Notes due 2021 to an amendment
of the indentures for each of those notes, clarifying that the transactions contemplated by the
Acquisition Agreement are permitted under those indentures.
The Acquisition Agreement contains customary representations and warranties, covenants and
indemnification obligations. If either CNX or the Company terminates the Acquisition Agreement
because of a willful breach by the other party or the other partys election not to close despite
all of the closing conditions having been met, the party terminating the Acquisition Agreement will
receive liquidated damages of $100 million from the other party.
The Acquisition Agreement is expected to close on September 30, 2011, or if the conditions to
closing identified in the Acquisition Agreement have not yet been satisfied as of such date, as
soon thereafter as such conditions have been satisfied or waived.
The description set forth above of the Acquisition Agreement has been included solely to
provide investors and security holders with information regarding its terms. It is not intended to
be a source of financial, business or operational information about the Company or any of its
subsidiaries or affiliates or their assets. There can be no assurance that the transactions
contemplated by the Acquisition Agreement will be consummated.
This Form 8-K includes projections and other forward-looking statements within the meaning
of the federal securities laws. Such projections and statements reflect the Companys current views
about future events and financial performance. No assurances can be given that such events or
performance will occur as projected, and actual results may differ materially from those projected.
Risks, uncertainties and assumptions that could cause actual results to differ materially from
those projected include, without limitation, the timing to close the transaction, the failure to
satisfy closing conditions to the transaction, the Companys ability to achieve the benefits
contemplated by the transaction, the diversion of management time on transaction-related issues,
the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of
estimated reserves, drilling and operating risks, exploration and development
risks, government regulation or other action, the ability of management to execute its plans
to meet its goals, competition, the ability to replace reserves, environmental risks and other
risks inherent in the Companys business that are detailed in its Securities and Exchange
Commission filings. Words such as anticipates, believes, expects, intends, will,
should, may, and similar expressions may be used to identify forward-looking statements. The
Company assumes no obligation and expressly disclaims any duty to update the information contained
herein except as required by law.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
NOBLE ENERGY, INC.
|
|
Date: August 23, 2011 |
By: |
/s/ Arnold J. Johnson
|
|
|
|
Arnold J. Johnson |
|
|
|
Senior Vice President, General Counsel &
Secretary |
|
|