Rosetta Resources (ROSE) to be Acquired by Noble Energy Inc. in $2.1B Deal

Shares of Rosetta Resources Inc. (ROSE) were up +6.00 or +31.04 percent to $25.33 per share in Monday's premarket after news that Noble Energy Inc. (NBL) would be taking the company over in a $2.1 billion deal. Rosetta Resources stock closed at $19.33 showing no change in Friday's regular trading session.

Houston, Texas based Rosetta Resources Inc. is an independent onshore oil and gas exploration and development company with its main operations in the United States.
The company is a leading producer in the Eagle Ford Shale in South Texas, one of the largest unconventional domestic oil resources. The company also holds a large oil weighted position in the Permian Basin in West Texas.

Houston, Texas based Noble Energy Inc. was formerly known as Noble Affiliates Inc. Noble Energy Inc. is a multinational oil and natural gas production and exploration company with its core operations in the United States, primarily in the Marcellus Shale and DJ Basin. The company also runs operations in the Gulf of Mexico, offshore West Africa and offshore Eastern Mediterranean.

The agreement between the two companies will have Rosetta shareholders receive 0.542 of a Noble share for each Rosetta share they own. Based on Noble Energy's closing price on Friday, the transaction has an implied value of $26.62 per Rosetta share, which represents a premium of +28 percent over the average price of Rosetta stock over the last 30 trading days. After the transaction, Rosetta shareholders will own approximately 9.6 percent of Noble Energy.

Rosetta's Chairman, Chief Executive and President, Jim Craddock, stated in the company's press release that, "The combination with Noble Energy brings together two complementary companies with a deep and diverse portfolio of assets in key unconventional resource basins. The deal will accelerate value delivery from our strong asset base, and the all-stock nature of the transaction will allow our shareholders to continue to reap that value growth across commodity price cycles. I have long respected Noble Energy and its management team, which has a strong track record of delivering substantial value to shareholders, both from the U.S. onshore business as well as global offshore exploration and development. I am confident the combined team, strong balance sheet, and premier asset base is poised for further success and shareholder value creation.

In addition, Noble Energy will assume $1.8 billion of Rosetta's net debt. Noble will receive over 100,000 acres in the Eagle Ford and Permian shale basins in Texas. The two regions comprise some of the most oil rich shale deposits in the United States. Noble Energy will add the Texas shale deposits to its present operations in the DJ Basin in Colorado and in the Marcellus region in West Virginia and Pennsylvania.

Investors are confident in the deal, with both stocks up in premarket trading on Monday. Noble Energy stock was up a fraction, which indicates approval on Noble stockholders despite the $2.1 billion price and the assumption of the $1.8 billion in debt, which exceeds Rosetta's $1.5 billion market valuation.

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Published on May 11, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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