Noble Energy Inc. (NBL) announced that the A-2 appraisal well encountered roughly 120 feet of net natural gas pay in the Block 12 discovery offshore the Republic of Cyprus. The Cyprus A field is the third prime discovery in the Levant Basin to date.
Noble Energy is the major operator of Block 12 carrying a 70% working interest while Israel’s Delek Drilling and Avner Oil Exploration each holds a 15% working interest.
The company encountered net natural gas pay within the targeted Miocene-aged sand intervals. The well was drilled to a total depth of 18,865 feet in 5,575 feet of water and is situated more than four miles northeast of the A-1 discovery.
The gross resources estimate was updated ranging from 3.6 trillion cubic feet (Tcf) of natural gas to 6 Tcf, with an average of 5 Tcf after extensive drilling data, wireline logs and reservoir performance evaluations.
Noble Energy performed production testing procedures over a 39-foot section of the upper Miocene reservoir which resulted in a maximum flow rate of 56 million cubic feet per day (MMcfd/d) of natural gas. The current flow rate came in lower limited by surface equipment. Noble Energy estimates the development wells in the reservoir to supply up to 250 MMcfd/d.
Although the mean resource estimate is lower than the initial estimate of 7 Tcf announced at 2011 end, Noble Energy believes additional appraisal activities will further refine the final recoverable resources and improve field development planning. The result from the A-2 field indicates substantial recoverable natural gas and increased delivery capacity of reservoirs.
In addition, Noble Energy is optimistic regarding its liquefied natural gas ("LNG") terminal project in Cyprus. However, the lower natural gas estimate might briefly stall the project’s progress. The LNG project is critical to Noble Energy’s plans of accessing the lucrative gas market of Israel.
The company is also making headway in the development of the Ashdod terminal to facilitate its gas production in the country. Noble Energy’s strategy to invest $400 million in the Eastern Mediterranean in 2013 will certainly fetch attractive returns.
However, the recent Colorado flood has affected Noble Energy’s operations. About 7% of the company’s estimated wells were damaged which will disrupt production activities.
The company currently carries a Zacks Rank #3 (Hold). Other well-placed industry players include Zacks Ranked #1 (Strong Buy) Matador Resources Company (MTDR), Stone Energy Corporation (SGY) and Swift Energy Co. (SFY).