HOUSTON, Feb. 6, 2014 /PRNewswire/ -- Noble Energy, Inc. (NYSE: NBL) today announced the signing of a non-binding memorandum of understanding regarding the sale of interest in the Leviathan licenses, offshore Israel to Woodside Petroleum. Each of the existing Leviathan partners, Noble Energy, Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration, are participating as sellers of a 25 percent interest in the licenses to Woodside. Noble Energy will convey a 9.66 percent working interest and will continue as upstream operator with a 30 percent working interest. Following completion of the transaction, Woodside will become the operator of any LNG development of the field.
Charles D. Davidson, Noble Energy's Chairman and CEO, commented, "Our partnership is excited to have executed this MoU with Woodside who brings extensive global expertise in LNG operations and marketing to the partnership. Their addition to the project will result in substantial added value while also bringing us much closer to when we will be able to sanction Leviathan for development."
Total compensation to Noble Energy is anticipated to include $525 million in cash payments plus $502 million in shared future revenues. The initial cash payment of $390 million is payable at closing of the transaction, which is expected in 2014. The remaining cash amount of $135 million is due when a final investment decision is made in relation to an LNG or FLNG development or as regional export contracts are executed in excess of a threshold volume amount, whichever occurs earlier. The shared future revenue represents 5.75 percent of export revenue attributable to Woodside's net export sales, commencing once the gross exported volume from the Leviathan field exceeds 2.0 trillion cubic feet (Tcf) of natural gas.
An additional payment of $19 million, net to Noble Energy, will be made should ultimate recoverable Leviathan resources be determined to be in excess of 20 Tcf gross of natural gas. The determination and payment will occur no earlier than when cumulative field production reaches 4 Tcf. In addition, the sellers will receive a royalty of 2.5 percent of Woodside's future oil revenues associated with the deep Mesozoic should a commercial discovery and development result on the licenses. The royalty would go into effect following net payout of investment.
The memorandum of understanding includes the agreed-upon commercial terms of the farm-out transaction and sets the timeframe for execution of definitive agreements. The transaction remains subject to the execution of definitive agreements between the parties, as well as necessary and customary regulatory approvals.
The Leviathan project is located on the Rachel and Amit licenses offshore Israel in 5,550 feet of water. It has an estimated 19 Tcf of discovered natural gas resources.
Following completion of the transaction, working interests in the Leviathan Project will be: Noble Energy (30.00 percent), Delek Drilling (16.94 percent), Avner Oil Exploration (16.94 percent), Woodside Petroleum (25.00 percent), and Ratio Oil Exploration (11.12 percent).
Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. The Company has core operations onshore in the U.S., primarily in the DJ Basin and Marcellus Shale, in the deepwater Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa. Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL. Further information is available at www.nobleenergyinc.com.
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This news release contains certain "forward-looking statements" within the meaning of federal securities law. Words such as "anticipates," "believes," "expects," "intends," "will," "should," "may," and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect Noble Energy' s current views about future events. They include the execution of definitive agreements between the Leviathan partners and Woodside, estimates of oil and natural gas reserves and resources, estimates of future production, assumptions regarding future oil and natural gas pricing, planned drilling activity, future results of operations, projected cash flow and liquidity, business strategy and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this news release will occur as projected, and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, without limitation, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other actions, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy's business that are discussed in its most recent annual report on Form 10-K and in other reports on file with the Securities and Exchange Commission. These reports are also available from Noble Energy's offices or website, http://www.nobleenergyinc.com. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Energy does not assume any obligation to update forward-looking statements should circumstances or management's estimates or opinions change. The Securities and Exchange Commission requires oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The SEC permits the optional disclosure of probable and possible reserves, however, we have not disclosed the Company's probable and possible reserves in our filings with the SEC. We use certain terms in this news release, such as "discovered natural gas resources," which are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our most recent annual report on Form 10-K and in other reports on file with the SEC, available from Noble Energy's offices or website, http://www.nobleenergyinc.com.
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