Better known just a few years ago as a deepwater Gulf of Mexico (GOM) force, Noble Energy Inc. has made some strategic moves in the past few years that have transformed the company and prepared it for double-digit production growth for up to a decade, CEO Chuck Davidson told investors Tuesday.
The company's compound annual production growth rate will jump by an average of 17% over the next five years to about 490,000 boe/d and growth should continue in double digits 10 years from now, Davidson said during an investor day conference in Houston. Especially transforming have been the past 16 months, he told the crowd.
"We have seen more change within this company in the past 16 months than at any time since the merger with Patina," which was seven years ago, Davidson said. In 2004 Noble paid $3.4 billion to buy Rocky Mountain producer Patina Oil & Gas Corp. (see Daily GPI, Dec. 17, 2004). "All of these changes are positive but a lot has happened since June 2010," when the company last met with investors.
The changes have "had a dramatic impact on the company, which has dramatically changed our growth profile going forward. It's because of major discoveries, major projects moving forward, major acquisitions...We are now positioned for a decade of growth."
About 17 months ago Noble's exploration efforts in the United States were concentrated in the GOM and what is still its largest onshore property, the Wattenberg Field in northeast Colorado, which it acquired in the Patina transaction. Noble's portfolio extends into Equatorial Guinea and Israel, as well as China, the North Sea and West Africa.
June 2010 proved to be a turning point. The Macondo well blowout in the GOM two months earlier halted deepwater development. But it didn't deter Noble from making other plans.
In the second half of 2010 Noble sanctioned two overseas projects (Tamar and Alen), sold some noncore properties and unveiled its Leviathan discovery offshore Israel.
And this year? Noble has gotten back to business in the GOM after receiving its first deepwater permit for the Santiago discovery. It also accelerated its Wattenberg development by leaps and bounds, and it made two big discoveries overseas. In addition, the Marcellus Shale is now a core holding after Noble bought half of a 663,350 net-acre leasehold in Pennsylvania and West Virginia from Consol Energy Inc. (see Daily GPI, Aug. 19).
"Each of these areas will have double-digit production growth," said Davidson. "The proven reserves are projected to increase 150% over the next five years. Every one of the core areas has stunning growth over the next five years. Not just one or two, but all five core areas."
Noble's net risked resources have jumped by 75% to 7.4 billion boe "since we met in June 2010," said the CEO. "A big driver is exploration. We've seen examples of companies that are successful in exploration and then quit...But our capital investment for the next five years almost doubles to $24 billion from $13 billion.
"It's a big jump not because of cost increases but because of opportunities." The Marcellus already has been "impactful" in reserves growth, he said.
By 2015 Noble is forecasting that U.S. oil and gas output alone will climb by 66%.
"If you look at 2021, only 15% of our production in that year comes from future exploration," said Davidson. "These are known projects. I've never been in such a position. I've been in a position where I was looking for my next meal for the next year. But I've never been in a position where I know I'm going to get that meal 10 years out."
The company is, in fact, "right on the verge in four months of 13,000 b/d of net new production" from its portfolio, said COO Dave Stover. "And we still have an extensive, deep portfolio in the deepwater Gulf."
In 2012 Noble plans to bring on new production from the Santiago prospect. It also expects its Galapagos development in the GOM to deliver 10,000 b/d of net oil production early next year with the potential to reach up to 14,000 b/d.
Noble has 39 identified projects in the deepwater, with 23 stand-alone subsalt Miocene prospects. A one-rig exploration program is planned for 2012 and 2013 to continue to evaluate the portfolio, which is estimated to contain more than 500 million boe of net risked reserves.
Also high on the agenda is more growth in Colorado, where Noble controls more than 800,000 total acres, including 400,000 net acres in the Wattenberg Field, where Noble has identified 1.3 billion boe of net risked resources with the potential for even more. Anadarko Petroleum Corp. also is reporting strong results in the Wattenberg (see related story).
Noble now has 58 producing wells in the Niobrara formation of the field that to date has produced 18,000 boe/d gross and 14,000 boe/d net.
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