Noble to Drill Cyprus A Prospect in 4Q

Noble Energy will relocate one of three deepwater rigs it is operating in the eastern Mediterranean Sea to drill the Cyprus A prospect during this year's fourth quarter, said Noble Chairman and CEO Charles D. Davidson at the Barclays Capital 2011 CEO Energy Conference earlier this week.

Noble said its prospect offshore Cyprus is analogous to the structures it has drilled offshore Israel, and anticipates that prospects offshore Cyprus also will contain gas. Drilling offshore Cyprus is still risky, but they basically are the same system, said Davidson.

"The prospect is an important data point, could change the dynamics further on how gas is marketed in the eastern Mediterranean Sea," Davidson said. "In our view, they have some demand for natural gas, and the scale of the projects in Cyprus will far exceed demand there."

Noble and the Cyprus government signed a production sharing contract to launch exploration activities in the 324,000-hectar economic zone southeast of the island.

According to media reports, tensions have mounted between Cyprus and Turkey over the island nation's plans to begin oil and gas exploration in the eastern Mediterranean Sea. Greek Cypriots, who control Cyprus' internationally recognized government, and Turkish Cypriots are at odds over how revenue from oil and gas production will be shared. Turkey, which backs the Turkish Cypriots, said it would take action if exploration begins before the dispute can be resolved.

Noble operates approximately three million gross acres in the eastern Mediterranean, where is recently acquired additional 3D seismic data and has identified multiple prospects and leads.

The Tamar and Leviathan discoveries offshore Israel, which include 25 Tcf of gross mean resources, are the largest global deepwater gas discoveries made in the past decade. "With the discovery of Tamar, Israel became energy independent in terms of gas," said Davidson. "The discovery of Leviathan has turned Israel into a potential energy exporter."

The company is on track to commission the Tamar production facility in late 2012, with production set to begin in 2013. A rig is on location drilling development wells, and construction of the production platform is underway. The initial development phase calls for five subsea completions with 200 MMcfe/d to 250 MMcf/d per well, and process capacity expanded to 1 Bcf/d at existing onshore facility. Mari-B infrastructure will be utilized as part of this development phase. The Tamar discovery has a resource estimate of 8.4 Tcf.

Noble also is moving ahead with the Noa development, which includes a two-well tieback to the Mari-B facility. First production is expected in the second half of 2012, and will supplement Mari-B deliverability by 100 MMcf/d. Mari-B is nearing full operational reliability, with the Mari-B compression project finalized and second quarter demand up 40 percent from 2010.

"Our current production [in Israel] is extremely strong, with high demand in Israel for gas, with a very strong draw for supplies from Mari-B," Davidson said

Noble expects results in this year's third quarter from its appraisal work to further define the Leviathan resource, which is estimated to hold gross gas resources of 16 Tcf. The company will return to assess deeper stratigraphic sections of Leviathan and is evaluating development scenarios for the discovery, including domestic and export options.


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