Noble Energy Inc. agreed to acquire Rosetta Resources Inc. for $2.1 billion in stock, giving the natural gas and oil producer a position in two of the largest areas of shale production in Texas.
Noble will also assume Rosetta’s net debt of $1.8 billion, the companies said in a statement on Monday. The per-share offer is valued at $26.62, a 38 percent premium to the target’s closing price on Friday. The Eagle Ford basin was the most productive U.S. oil field at the end of 2013, according to the latest Energy Department data.
The premium for Rosetta is below average for the sector over the past five years, suggesting there are more mergers to come, said Fadel Gheit, a New York-based analyst for Oppenheimer & Co. It’s the largest takeover of a U.S. oil and gas producer announced this year, according to data compiled by Bloomberg.
“We’re going to see a lot of mergers and acquisitions,” Gheit, who rates Noble shares at market perform and owns none, said Monday in a telephone interview. “Everybody is looking for the big deal.”
Rosetta’s assets include 50,000 acres in the Eagle Ford and 56,000 acres in the Permian. Rosetta produced 66,000 barrels a day of oil and gas in the first quarter from the two regions, of which more than 60 percent was liquids.
“The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic in the U.S.,” Dave Stover, Noble’s chief executive officer, said in the statement. “The transaction will be immediately accretive to our per share production, reserves, earnings, and cash flow.”
Rosetta shareholders will get 0.542 of a Noble share for each share they hold and are expected to own 9.6 percent of the outstanding shares of Noble, according to the statement.
Martijn Rats, an oil analyst at Morgan Stanley, said in a report on Monday that M&A was “arguably” a cheaper option for growth than organic investment. “Upstream M&A will likely accelerate as confidence grows,” he said.
The largest takeover in the sector announced this year is the pending $53 billion purchase of BG Group Plc by Royal Dutch Shell Plc.