Noble Energy will pay about $2.1 billion for Rosetta Resources in an all-stock deal that gives the oil and gas company access to two massive Texas shale formations.
Assets belonging to Rosetta Resources Inc. include about 50,000 net acres in the Eagle Ford Shale and another 56,000 acres in the Permian Basin. The deal will immediately boost its per-share production and earnings at Noble Energy Inc., the company said Monday.
Industry observers have been waiting for consolidation in the energy sector after watching oil prices tumble over the past year. Operators much smaller than Noble and Rosetta are getting hit the hardest.
American Eagle Energy Corp. filed for Chapter 11 bankruptcy protection Friday after missing an interest payment, just as Quicksilver Resources Inc. and BPZ resources Inc. had done before it. A number of other producers are in talks with lenders.
Yet almost all energy companies have been cutting production because of falling prices and many see mergers as the best way to grow.
Rosetta Resources, which also is based in Houston, said last week that it booked a first-quarter loss of $539.7 million in a performance that missed Wall Street expectations.
Noble Energy reported a loss of $22 million in the quarter.
The deal comes as crude prices have climbed nearly 36 percent since bottoming out below $44 a barrel in March. Gasoline prices, while still comparatively low, have jumped 31 percent since hitting a six-year low in January, just as the U.S. heads into the driving season.
The Houston company will pay a portion of its stock valued at $26.62 for each Rosetta share. That's a 38 percent premium to Rosetta's closing price Friday of $19.32. It also represents a 28 percent premium to the average price of Rosetta shares over the last 30 trading days.
Aside from the deal price, Noble Energy also will assume Rosetta's $1.8 billion in net debt.
The boards of directors of both companies have approved the deal. Rosetta shareholders, who would wind up with a nearly 10-percent stake in Noble Energy, still must vote on it. The companies expect the deal to close in the third quarter.
Rosetta shares soared nearly 35 percent, or $6.67, to $26 before markets opened Monday and after the companies announced the deal. The stock had slipped about 13 percent so far this year, as of Friday.
Noble Energy shares fell almost 5 percent to $46.81 in early trading, while share of Rosetta jumped 29 percent to $25.