NEW YORK (TheStreet) -- Noble Energy (NBL) shares are down 4.97% to $46.68 in pre-market trading on Monday after the oil and gas explorer and producer today purchased Houston-based oil company Rosetta Resources (ROSE) for $2.1 billion.
The company agreed to purchase Rosetta for $26.62 per share, a 38% premium over Rosetta's closing price on Friday, with the deal expected to close in the third quarter of this year.
Two of the plays that Noble specifically mentioned in its bid announcement are the 50,000 acre Eagle Ford and 56,000 acre Permian Basin which were responsible for producing 66,000 barrels of crude per day in the first quarter.
"The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic in the U.S. The transaction will be immediately accretive to our per share production, reserves, earnings, and cash flow," said Noble CEO Dave Stover.
Rosetta shares are up 30.42% in pre-market trading today.
TheStreet Ratings team rates NOBLE ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NOBLE ENERGY INC (NBL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for NOBLE ENERGY INC is rather high; currently it is at 62.21%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -2.96% trails the industry average.
- NBL, with its decline in revenue, slightly underperformed the industry average of 37.8%. Since the same quarter one year prior, revenues fell by 44.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NOBLE ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 111.0% when compared to the same quarter one year ago, falling from $200.00 million to -$22.00 million.
- You can view the full analysis from the report here: NBL Ratings Report