Noble Energy NBL announced that Leviathan natural gas field has started commercial operation as expected. Its four wells and both subsea flowlines are currently fully operational. Natural gas produced from this field is currently supplied to Israel, Jordan and Egypt. The combined gross natural gas sales from the Leviathan and Tamar fields have averaged 1.5 billion cubic feet equivalent per day (Bcfe/d) in January, with peak day sales reaching up to 1.7 Bcfe/d.
The Leviathan Field
This Leviathan field is located 80 miles offshore Israel in 5,500 feet of water. It is estimated to have recoverable resources of 22 trillion cubic feet (Tcf) of natural gas from 35 Tcf of in-place resource. Noble Energy holds a 39.66% interest in the Leviathan project, and other interest owners include Delek Drilling LP with 45.34% stake and Ratio Oil Exploration LP with 15%.
In the second half of 2019, Noble Energy and its partners amended sales agreements for the delivery of natural gas from Leviathan and Tamar fields to Egypt. The companies will now provide 3 Tcf of natural gas, reflecting an increase of 62.2% from 1.85 Tcf in the prior agreements. The duration of the agreements is extended to 15 years from the initial expectation of 10 years.
How Will Noble Energy Benefit?
Noble Energy expects combined regional sales for Tamar and Leviathan to range between 1.6 Bcfe/d and 1.8 Bcfe/d for 2020. Natural gas produced from this field will assist Israel’s gradual transition from polluting coal to natural gas as a fuel source and improve air quality in the region.
The natural gas produced from these field will have a steady demand, as rapid industrialization in Jordan is leading to higher residential and commercial natural gas consumption. In Egypt, the gas will not only be used domestically but can also be liquefied and exported, making it a regional hub for natural gas.
These developments indicate that the offshore natural gas field in Israel is going to have a positive impact on Noble Energy’s total production and performance.
U.S. Natural Gas Production
Noble Energy has a strong presence in the United States and serves customers through high-quality U.S. onshore assets in DJ Basin, Delaware Basin and Eagle Ford Basin, which contributes nearly 76% to the company’s sales volumes. For the fourth quarter, sales volumes from U.S. onshore assets are projected to be in the range of 276-288 thousand barrels of oil equivalent per day (MBoe/d), with total sales volumes expected within 364-376 MBoe/d.
Shale revolution in the United States has assisted in the massive increase in hydrocarbon production in the last few years. Production of natural gas in United States is rising gradually. The recent release from the U.S Energy Information Administration forecasts that U.S. natural gas production capacity will touch 94.7 Bcf/d in 2020, up 2.9% from 2019 levels.
Companies like Exxon Mobil XOM, CNX Resources Corporation CNX and EQT Corporation EQT, among others, contributed considerably toward overall natural gas production in the United States.
Price Performance and Zacks Rank
In the past 12 months Noble Energy’s shares have outperformed its industry.
It currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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