The most interesting part of Noble Energy Inc.’s February agreement to sell its sprawling Gulf of Mexico (GoM) assets, where it has explored and worked since 1968, is that its buyer is broke.

Fieldwood Energy LLC reached an agreement to buy Noble’s watery assets for $480 million and, on the same day, filed for Chapter 11 bankruptcy. This minor complication is due to Fieldwood’s $3.3 billion in debt and accrued and unpaid interest.

Since entering bankruptcy, Fieldwood now has the cash to continue operations as well as a $60-million facility provided through debtor-in-possession financing. To its credit, Fieldwood held on a long time, despite the grueling stretch of lower oil and gas prices, which has forced at least $80 billion worth of E&P debt through courthouse turnstiles since 2015.

And Fieldwood has a plan. Backed by its lenders, the E&P’s prepackaged bankruptcy will reduce debt by about $1.6 billion and raise $525 million through an equity rights offering. The proceeds will be forwarded to Noble for its declining GoM assets and to fund Fieldwood’s operations. The company will also assume Noble’s abandonment obligations of roughly $230 million and, through contingency payments linked to crude prices, may pay Noble another $100 million.

In short, after about five years and $5 billion in acquisitions, Fieldwood’s strategy to sort out its debt involves making another acquisition and riding its existing cash flow into the black.

Fieldwood management believes “that the purchased assets will provide accretive value to the debtors through operational efficiencies and synergies with [its] existing assets and through the elimination of redundant costs,” bankruptcy documents say.

The assets include physical equipment and prospective inventory on 45 primary term leases. That will add to Fieldwood’s empire aquatic, which now encompasses 2 million gross acres and more than 500 operated platforms.

“This is extremely unusual, but maybe from that standpoint it makes sense for a financially stressed company,” Michael Scialla, an energy analyst at St. Louis-based investment banking firm Stifel Financial, told the Houston Chronicle.

So, will Fieldwood find enough liquidity by acquiring a couple of dozen more leagues in the sea?

From Fieldwood’s point of view, yes.

In year one of the deal, which is set to close in second-quarter 2018, the company estimates the deal brings in an estimated $324 million in unlevered cash flow. That dips to $252 million in 2019 and then averages roughly $560 million the next three years through 2022.

During the same period, Fieldwood’s net leverage, assuming no other acquisitions or additional debt, pulls it from a post-deal 1.7x to 0.3x.

The GoM assets include six producing fields and undeveloped leases. Noble projected GoM net production will average more than 20,000 barrels of oil equivalent per day (boe/d) in 2018. At the end of 2017, the company estimated its proved GoM reserves at 23 MMboe.

Fieldwood contends the assets also offer organic growth opportunities, including a near-term development project, which if successful could result in a significant increase in the total amount of proved reserves.

Noble’s numbers suggest the GoM is a maturing asset. In the fourth-quarter, Noble reported EBITDA of $789 million. From that figure, an estimated 8% was generated from its GoM assets, or $63 million.

Noble’s GoM-related annual EBITDA works out to roughly $275 million, said Phillips Johnston, an analyst with Capital One Securities. Fourth quarter oil production was 18,000 barrels per day (bbl/d/)—down 14% compared to third-quarter 2017 production of 21,000 bbl/d. NGL and natural gas production were up.

Noble’s book value for its GoM assets is $750 million. Capital One carried a value of $1.1 billion for the assets. “The GoM assets are inherently low-multiple assets with no visible growth opportunities,” Johnston said.

Since its inception, Fieldwood had been an avid acquirer, beginning in 2013 with a $3.8-billion deal to buy Apache Corp.’s GoM assets.

But in many respects, its pending Noble transaction may be its most important. As Sean Connery observes in “The Hunt for Red October,” a 1990s submarine flick, “and the sea will grant each man new hope, as sleep brings dreams of home.”

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