Noble Reveals Niobrara Capital Plan - Analyst Blog

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Noble Energy Inc. 's ( NBL ) share price climbed 40 cents to close at $67.40 on Oct 14, 2013 on the back of the company's announcement of a planned investment of $10 billion in the next five years in the Niobrara play in the Denver-Julesburg (DJ) Basin.

The lofty investment is expected to bolster Noble Energy's production level in the coming years. Noble Energy will allocate 43% of its capital budget in the Niobrara Basin in 2013 and will exploit the asset to attain its annual production growth target of 17% through 2017.

Noble Energy's production volume might reach 540,000 barrels of oil equivalent per day (boe/d) by 2017, more than double the current production level of 260,000 boe/d, if the company accomplishes its target.

Roughly $1.7 million is being spent in 2013 for the development of the Niobrara play. This involves Noble Energy's plan of finishing 300 wells and ramping up production from 90,000 boe/d in 2012 to 110,000 boe/d by year-end 2013.

With more wells coming online, production is estimated to increase by 180,000 boe/d and would allow Noble to achieve its ambitious production goal. Noble Energy has already witnessed favorable drilling results in 9,500 horizontal well locations in the Niobrara play.

The company is enhancing its operational capabilities to pull off its plan of drilling 500 wells per year by 2017 which would accelerate production volume by 20% a year. We believe these investments will fetch lucrative returns for Noble Energy which in turn will lead to value accretion for the company's shareholders.

The Colorado mishap might however delay Noble Energy's production commitments in the short run. Over the long haul, significant oil discoveries in the company's prime Gulf of Mexico prospect and encouraging opportunities from the domestic natural gas assets will act as major catalysts to growth.

Another leading oil and gas operator expected to capitalize on the reserve-rich DJ Basin is Anadarko Petroleum Corp. ( APC ) with its prospects in the adjacent Wattenberg play.

At the moment, Noble Energy carries a Zacks Rank #3 (Hold). However, other better-placed exploration and production players include Zacks Ranked #1 (Strong Buy) Matador Resources Co. ( MTDR ) and Stone Energy Corp. ( SGY ).



ANADARKO PETROL (APC): Free Stock Analysis Report

MATADOR RESOURC (MTDR): Free Stock Analysis Report

NOBLE ENERGY (NBL): Free Stock Analysis Report

STONE ENERGY CP (SGY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: APC , MTDR , NBL , SGY

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