Noble Energy (NYSE:NBL) benefited from higher production and stronger commodity prices in the third quarter of 2010. The company also advanced its large project portfolio located offshore Israel, and added to its onshore acreage in key emerging shale plays in the United States.

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Q3 Summary
Noble Energy reported average production of 232,000 barrels of oil equivalent (BOE) per day in the third quarter of 2010, up from 217,000 BOE per day in the same quarter of 2009.

Noble Energy also realized higher prices for oil, natural gas and natural gas liquids in the third quarter of 2010 compared to 2009. The company received $73.41 per barrel of oil, compared to $63.36 per barrel in 2009. Natural gas liquids netted $36.30 per barrel for the company, up from $25.39 per barrel in 2009, while Noble Energy received $2.82 per thousand cubic feet for natural gas, up from $2.41 per thousand cubic feet in the third quarter of 2009.

The strong performance during the quarter led the company to bump up its production guidance for 2010 to the upper end of the previous range. The company now expects 2010 production to be in a range from 214,000 to 217,000 BOE per day.

Niobrara Shale
One emerging play that Noble Energy has entered is the Niobrara Shale in Colorado and Wyoming. During the quarter, Noble Energy increased its position to more than 830,000 net acres. One area that Noble Energy is focused on is the Denver Julesburg basin, where the company reported has a strong production base of over 54,000 BOE/d. Noble Energy plans to drill nine horizontal wells in the second half of 2010 to delineate the extent of the play in the Denver Julesburg basin.

In the Wattenberg field, Noble Energy is also developing the Niobrara Shale, and plans to drill 20 horizontal wells before the end of 2010. A typical horizontal well here costs $3.5 million has a gross estimated ultimate recovery of 290,000 BOE.

Other companies developing the Niobrara Shale include Anadarko Petroleum (NYSE:APC), which started up its development program in the third quarter of 2010. Whiting Petroleum Corporation (NYSE:WLL) has 32,000 net acres in Wyoming and plans two vertical wells in November 2010. MDU Resources (NYSE:MDU) also has leasehold in Wyoming that is prospective for the Niobrara Shale. The company recently signed a joint venture to help share development costs here, and plans to start drilling exploratory wells in 2011.

Noble Energy is currently drilling a well at the Leviathan prospect located offshore Israel. This prospect is similar to the successful Tamar prospect nearby which the company has been working on for several years. A success at Leviathan would be a huge event for Noble Energy as the company estimates gross resources here at 16 TCF.

Noble Energy also drilled two new wells at the Mari B prospect, and reported production of 178 million cubic feet per day from its properties in Israel.

The Bottom Line
Noble Energy used the third quarter of 2010 to advance development of its onshore Niobrara Shale properties in the Rocky Mountain area, and also recently started drilling a high profile exploratory well offshore Israel. (For more stock analysis, see Investing In Israel.)

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Tickers in this Article: NBL, APC, WLL, MDU

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