Morningstar | NBL Updated Forecasts and Estimates from 16 Aug 2018
Noble Energy has significant production in several markets, including the U.S., the eastern Mediterranean, and West Africa. The firm also has a long track record of exploration success, with further opportunities on deck in Suriname, Gabon, and the Falkland Islands (exploration is inherently risky, but a discovery in any of these areas could generate substantial upside). At the end of 2017 the company laid out plans to reach 525 mboe/d by 2020 (up 37% versus 2017). Though this target is achievable, our bearish views on near-term commodity prices weigh on our 2019-20 forecasts (we expect management to respond to lower prices by ramping activity at a more modest pace).This year, roughly 65% of the firm's $2.8 billion capital program will be allocated to the U.S. onshore segment. Noble has acreage in several unconventional plays. The Delaware Basin accounts for the majority of this year's onshore activity, and the firm is one of the largest leaseholders there. It has almost 120,000 net acres in southern Reeves County, which is a little south of the basin's sweet spot near the New Mexico border. But the area still delivers very impressive economics, and as Noble's footprint is highly contiguous, it can employ longer laterals to further improve returns (we project a WTI breakeven of about $30/bbl).The international portion of the business, which comprises roughly 25% of Noble’s current output, provides geographic diversification. It includes Brent-linked oil production in Equatorial Guinea, and natural gas production in the eastern Mediterranean (offshore Israel). The latter triggered intense regulatory scrutiny, and Noble spent years haggling with the local government over export rights and price stability. But this is apparently resolved, paving the way for the development of the 22-trillion-cubic-foot Leviathan field. First production is scheduled for late 2019, and management anticipates an average contribution from this asset of 800 mmcf/d in 2020.Noble Energy is an independent energy company, engaged in crude oil and natural gas exploration and production. The company's operating areas include: U.S. onshore, primarily the DJ Basin, Delaware Basin and Eagle Ford Shale; U.S. offshore Gulf of Mexico; Eastern Mediterranean; and West Africa. The company's Midstream segment develops, owns, operates and acquires domestic midstream infrastructure assets, or invests in other midstream entities, with existing focus areas being the DJ and Delaware Basins. The company's activities include geophysical and geological evaluation; analysis of commercial, regulatory and political risks; and exploratory and development drilling leading to production, where appropriate.
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