Noble Energy, Inc. (NYSE:
NBL) (“Noble Energy” or
“the Company”) announced today that it has sanctioned the first
phase of the Leviathan natural gas project offshore Israel, with
first gas targeted for the end of 2019. Noble Energy is the
operator of the Leviathan Field, which contains 22 trillion cubic
feet (Tcf) of gross recoverable natural gas resources.
David L. Stover, Noble Energy’s Chairman, President and CEO,
commented, “Leviathan marks our third major natural gas development
offshore Israel. Bringing Leviathan online will expand Israel’s
supply of natural gas, further support the State’s commitment to
convert coal-fired power generation facilities to cleaner burning
gas, and provide affordable energy resources to Israeli citizens
and neighboring countries in the undersupplied region. Leviathan
will provide a second source of natural gas for Israel through a
separate tie-in location in northern Israel. Noble Energy’s
financial strength and capability, proven technical expertise, and
phased Leviathan project development approach position us to
commence first gas on schedule and within budget.”
Stover concluded, “Sanction and development of Leviathan build
on recent portfolio milestones and reinforce our focus on
high-margin growth. Leviathan will generate robust project
economics, have strong investment efficiency, and provide long-term
cash flows. With 40 Tcf gross recoverable resources discovered by
Noble Energy in the region, we can continue to grow our Eastern
Mediterranean business for decades. This includes material
additional development beyond phase one at Leviathan.”
Leviathan’s initial development will include four subsea wells,
each capable of flowing more than 300 million cubic feet per day
(MMcf/d) of natural gas. Initial Leviathan proved reserve bookings
associated with this investment are 3.3 Tcf net (9.4 Tcf gross) and
are expected to be recorded in 2017. This translates into
approximately 550 million barrels of oil equivalent net,
representing an increase of over 35 percent to total company
reserves.
Production will be gathered at the field and delivered via two
73-mile flowlines to a fixed platform, with full processing
capabilities, located approximately 6 miles offshore. The Leviathan
platform will have an initial deck weight of 22,000 tons.
Processed gas will connect to the Israel Natural Gas Lines Ltd.
onshore transportation grid in the northern part of the country and
to regional markets via onshore export pipelines. The approved
development plan allows for significant future cost-effective
expansion from its initial 1.2 billion cubic feet per day (Bcf/d)
capacity to 2.1 Bcf/d.
The Company estimates gross capital for phase one of Leviathan
development will be $3.75 billion ($1.5 billion net to Noble
Energy), which includes approximately $100 million spent in 2016
and approximately $200 million pre-investment for future platform
expansion. The Company can fund phase one of Leviathan through
Tamar operating cash flows as well as Eastern Mediterranean
portfolio proceeds. Regional portfolio proceeds received to-date
total approximately $575 million, net. The Company is also securing
access to a financing facility for additional funding
flexibility.
Front-end engineering and design are complete, the Company is
currently finalizing major project contracts, and long lead
materials procurement has begun. Noble Energy and partners
anticipate drilling one to two Leviathan development wells in 2017.
Completion activity for all four producer wells, including
two previously drilled, is anticipated in 2018. The Company expects
to complete project installation and initiate commissioning in the
fourth quarter of 2019, with delivery of first gas targeted for the
end of 2019.
Marketing progress has resulted in total volumes under firm gas
sales agreements to date of up to 525 MMcf/d. Combined gross
revenues for these contracts are estimated to be in excess of $15
billion over the life of the agreements. Total quantities of the
executed gas sales agreements, together with domestic and regional
volumes under negotiation, now exceed 1 Bcf/d gross.
Leviathan blended sales price realizations for the domestic and
regional markets are estimated between $5.50 and $6 per thousand
cubic feet (Mcf) based on current Brent oil pricing. Pricing is
protected in a low commodity price environment with firm floors and
has upside potential linked to Brent oil price increases. Terms of
the domestic pricing are responsive to the Natural Gas Regulatory
Framework and reflect current market conditions.
The Company’s targeted sales volumes are 1 Bcf/d gross at
startup. Operating cash flow for the first year following startup
is projected to be at least $650 million net and full project
payout is expected within 3 years following startup at target
volumes.
Noble Energy operates Leviathan with a 39.66 percent working
interest. Other interest owners are Delek Drilling with 22.67
percent, Avner Oil Exploration with 22.67 percent, and Ratio Oil
Exploration (1992) Limited Partnership with the remaining 15
percent.
A supplemental Leviathan presentation is accessible on the
‘Investors’ page at www.nobleenergyinc.com.
Noble Energy (NYSE: NBL) is an independent oil
and natural gas exploration and production company with a
diversified high-quality portfolio of both U.S. unconventional and
global offshore conventional assets spanning three continents.
Founded more than 80 years ago, the company is committed to safely
and responsibly delivering our purpose: Energizing the World,
Bettering People’s Lives®. For more information, visit
www.nobleenergyinc.com.
Forward Looking Statements
This news release contains certain “forward-looking statements”
within the meaning of federal securities law. Words such as
“anticipates”, “believes”, “expects”, “intends”, “will”, “should”,
“may”, and similar expressions may be used to identify
forward-looking statements. Forward-looking statements are not
statements of historical fact and reflect Noble Energy’s current
views about future events. They may include estimates of oil and
natural gas reserves, estimates of future production, assumptions
regarding future oil and natural gas pricing, planned drilling
activity, future results of operations, projected cash flow and
liquidity, business strategy and other plans and objectives for
future operations. No assurances can be given that the
forward-looking statements contained in this news release will
occur as projected and actual results may differ materially from
those projected. Forward-looking statements are based on current
expectations, estimates and assumptions that involve a number of
risks and uncertainties that could cause actual results to differ
materially from those projected. These risks include, without
limitation, the volatility in commodity prices for crude oil and
natural gas, the presence or recoverability of estimated reserves,
the ability to replace reserves, environmental risks, drilling and
operating risks, exploration and development risks, competition,
government regulation or other actions, the ability of management
to execute its plans to meet its goals and other risks inherent in
Noble Energy’s business that are discussed in its most recent
annual report on Form 10-K and in other reports on file with the
Securities and Exchange Commission. These reports are also
available from Noble Energy’s offices or website,
http://www.nobleenergyinc.com. Forward-looking statements are based
on the estimates and opinions of management at the time the
statements are made. Noble Energy does not assume any obligation to
update forward-looking statements should circumstances,
management’s estimates, or opinions change.
The Securities and Exchange Commission requires oil and gas
companies, in their filings with the SEC, to disclose proved
reserves that a company has demonstrated by actual production or
conclusive formation tests to be economically and legally
producible under existing economic and operating conditions. The
SEC permits the optional disclosure of probable and possible
reserves, however, we have not disclosed the Company’s probable and
possible reserves in our filings with the SEC. We use certain terms
in this news release, such as “gross recoverable natural gas
resources” and “gross recoverable resources,” which are by their
nature more speculative than estimates of proved, probable and
possible reserves and accordingly are subject to substantially
greater risk of being actually realized. The SEC guidelines
strictly prohibit us from including these estimates in filings with
the SEC. Investors are urged to consider closely the disclosures
and risk factors in our most recent annual report on Form 10-K and
in other reports on file with the SEC, available from Noble
Energy’s offices or website, http://www.nobleenergyinc.com.
Investor Contacts
Brad Whitmarsh
(281) 943-1670
brad.whitmarsh@nblenergy.com
Megan Repine
(832) 639-7380
megan.repine@nblenergy.com
Media Contacts
Reba Reid
(713) 412-8441
media@nblenergy.com
Paula Beasley
(281) 876-6133
media@nblenergy.com
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