Energy Prospectus

Noble Energy purchases Clayton Williams Energy for $3.2 billion, inclusive of debt; NBL’s new full company production for 2020 is expected to reach 600 MBOEPD assuming $50 oil

My valuation of NBL was $54.20 before I heard this new.

NBL's current production is ~420,000 BOE per day, so this is HUGE news.

Read: http://www.oilandgas360.com/noble-energ ... quisition/

I have updated my forecast model for Noble Energy (NBL), doing my best to guess the impact of the acquisition of CWEI. The deal is more of a stock for stock merger, which will increase Noble's share count by approximately 11.7%.

My valuation of NBL increases by $7.80/share to $62.00, which compares to First Call's price target of $45.71.

NBL's valuation was going to around $58/share anyway because I rolled my valuation model forward a year. My valuation assumes that the merger with CWEI closes on April 30.

NOTE: My valuation of NBL is just 12X operating cash flow per share. All of the other Permian Basin companies are trading at 15X to 25X CFPS. Obviously, there is significant upside here if oil prices move over $60/bbl because NBL priced their offer assuming $50/Bbl WTI and $3.00/mcf for gas.

This morning Seaport Global raised their target from $33 to $36, but it's trading at 39.24.

For those of you interested in NBL, I highly recommend that you download my forecast model for NBL and compare it to CXO and PXD. I think you will see why NBL has a lot more upside.

I am working on PXD right now.

Other pure plays on the Permian Basin are FANG, PE and RSPP.