Noble Energy Sets Up For 2011

Noble Energy (NYSE:NBL) announced a multi-billion dollar oil and gas exploration and development budget in 2011, with large spending directed towards major projects in its domestic and global portfolio.

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2011 Capital Budget
Noble Energy announced a capital budget of $2.7 billion for 2011, a decline from 2010 spending. A large part of the funds will be going towards major projects, including the Niobrara Shale in the onshore area of the United States, and the deepwater Gulf of Mexico. Noble Energy also has projects in West Africa, and the Eastern Mediterranean where the company has a leading position in offshore Israel.

Niobrara Shale
Noble Energy has allocated $875 million to develop its properties in the Denver Julesburg basin, where the company is working on the Niobrara formation. The company plans to drill 70 horizontal wells in 2011 targeting this formation, a significant increase over 2010 levels.

NBL has a huge position of 830,000 net acres and already has existing production from a vertical well program.

Other exploration and production companies active in developing the Niobrara Shale include PDC Energy (Nasdaq:PETD), which has a 14 well horizontal program planned for 2011. Double Eagle Petroleum Co. (Nasdaq:DBLE) has 70,000 net acres here and plans to drill at least one well in 2011 to test the Niobrara.

Gulf of Mexico
Noble Energy also has a large position in the deepwater Gulf of Mexico, where the company has interests in both producing wells and prospective acreage. The company plans to spend $275 million here in 2011, and one area the company is focusing on is the Galapagos development in the Mississippi Canyon area. First production is scheduled for later in 2011.

Noble Energy estimates that net production from this development will peak at just under 18,000 barrels of oil equivalent per day in 2014. The company also plans several appraisal and exploration wells during the year in the Gulf of Mexico once drilling operations resume.

Offshore Israel
The most exciting area for Noble Energy is the company's activity in offshore Israel. In 2011, the company plans to spend $650 million to explore and develop this area. The company is working on the Tamar field, which was sanctioned in 2010. Noble Energy estimates that the field has as much as 8.4 Tcf of gross resources and expects first production in 2012.

Noble Energy plans to drill as many as four wells on other parts of its portfolio in 2011. One of these will be an appraisal well at the Leviathan discovery, where the company estimates gross mean resources of 16 Tcf.

West Africa
Noble Energy has allocated $575 million in spending for its West African portfolio, and is working on the Alen and Aseng developments in the offshore area. The company also plans several exploration wells here in 2011.

Africa is an active area for oil and gas exploration. Anadarko Petroleum (NYSE:APC) just reported a successful well offshore Ghana. The company found a total of 240 feet of net oil feet in five separate formations.

The Bottom Line
Noble Energy will use part of it $2.7 billion 2011 capital budget to fund its ambitious oil and gas exploration and development program. The company has a large inventory of opportunities in the United States and abroad. (Long-term energy outlooks suggest a fundamental energy shift to natural gas. To learn more, see Natural Gas Forecast.)

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