Noble Energy to Take Natural Gas to Jordan from Leviathan

Zacks Equity Research
September 4, 2014

Noble Energy Inc. (NBL) continues to benefit from its exposure in the Leviathan field offshore Israel. The company and its Leviathan partners signed another non-binding Letter of Intent (LOI.V) with National Electric Power Company Ltd. (:NEPCO) of Jordon to supply natural gas.

As per the LOI, Noble Energy and its partners will supply 1.6 trillion cubic feet of natural gas over a period of 15 years. The natural gas delivery is expected to take place at a border location between Israel and Jordan, following the completion of related pipeline infrastructure.

In June this year, Noble Energy had signed an LOI to supply natural gas from the Leviathan field to BG International for 15 yearsRead: Noble Energy Signs LOI to Supply Gas to BG International).

The present agreement with NEPCO is expected to be finalized after negotiations and will be subject to regulatory consent from Israel and Jordan. Noble Energy is the major interest owner with a 39.66% share in the Leviathan field while Delek Drilling and Avner Oil Exploration each hold a 22.67% interest. Ratio Oil Exploration Limited Partnership also carries a minor interest of 15%.

Natural gas usage is on the rise on a global scale due to its clean burning nature. Economic growth in the Middle-East has led to rising demand for natural gas. Noble Energy is efficiently utilizing the output from the Leviathan field to feed the natural gas hungry nations of the region.

Noble Energy has now secured over 60% of Leviathan's initial capacity and 80% of targeted initial sales volumes through LOIs. The Leviathan field has an estimated 22 Tcf of discovered natural gas resources.

Noble Energy is systematically expanding its operations in the domestic as well as international fields. The company outpaced the Zacks Consensus Estimate in the first half of 2014, backed by higher sales volumes.

Russia currently supplies a large volume of natural gas to European countries. We believe Noble Energy’s exposure in the Mediterranean Basin might create an opportunity to supply gas to the European countries as well.  

Noble Energy currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include World Point Terminals, LP (WPT), WPX Energy, Inc. (WPX) and Halcon Resources Corp. (HK). All of them hold a Zacks Rank #2 (Buy).

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