Noble Energy Tags $3.5B Capex for 2012
Noble Energy, Inc. announced its 2012 capital program and provided guidance for the year. Total capital expenditures are estimated at $3.5 billion for the year. The capital program allocates 51 percent to onshore U.S., seven percent to the deepwater Gulf of Mexico, 22 percent to the Eastern Mediterranean and 14 percent to West Africa. Global exploration and appraisal activity is expected to receive 16 percent of total capital.
Charles D. Davidson, Noble Energy's Chairman and CEO, stated, "Noble Energy is now positioned to accelerate our growth in production and cash flow with contributions from each of our five core areas. We have demonstrated our major project development capabilities by bringing Aseng to production late last year, months ahead of schedule and under budget. Galapagos will follow this year with Tamar and Alen on schedule for first production in 2013. The developments in the Niobrara and Marcellus continue to gain momentum and are expected to deliver consistent growth for many years. Exploration remains a key component of the 2012 program as we plan to test a number of prospects throughout our focus areas. The 2012 program remains consistent with our strategy of delivering value-adding growth through the exploration and development of a diversified portfolio of opportunities."
Within the U.S., the Company expects to invest $1.25 billion in the DJ Basin to expand horizontal Niobrara drilling to include 173 horizontal wells and to maintain an active vertical well program in Wattenberg in 2012. In the Marcellus Shale, $500 million is planned to support the drilling of 99 joint venture wells, targeting 39 operated wells in the liquids-rich area of the play. In the deepwater Gulf of Mexico, the Company expects to spend $250 million where a one-rig program is planned to conduct appraisal drilling at Gunflint and execute a multi-well exploration program.
Noble Energy's core international programs in West Africa and the Eastern Mediterranean represent $500 million and $750 million, respectively. In West Africa, plans are to advance the Alen liquid development project and to continue oil exploration drilling offshore Cameroon. In the Eastern Mediterranean, development activity is focused on the Tamar and Noa natural gas fields, while exploration plans include appraisal work and a deep oil test at Leviathan as well as additional testing of natural gas prospects offshore Israel.
Capital has also been allocated to China, the North Sea and several New Venture opportunities. Excluded from the total capital amount is a $328 million installment payment associated with the Marcellus acquisition, which was accrued in costs incurred during 2011.
The capital program is anticipated to be funded by operating cash flow and available balance sheet liquidity. Funding may also be supported by the proceeds from the expected divestment of non-core onshore U.S. assets throughout the year. The Company plans to maintain its investment grade credit rating.
Sales volumes for 2012 are projected to range from 244 to 256 thousand barrels of oil equivalent per day (Mboepd), with the midpoint of the range up about 13 percent compared to 2011. Nearly all of the projected production increase is crude oil and condensate, which is expected to grow over 40 percent year-over-year. The expected growth in crude oil and condensate production is balanced between onshore U.S., deepwater Gulf of Mexico and offshore Equatorial Guinea.
Overall liquid volumes are predicted to represent 46 percent of total volume in 2012, up from 39 percent in 2011. The remaining product split is estimated to be 31 percent domestic natural gas, a slight increase from 2011, and 23 percent international natural gas, a decrease from 32 percent in 2011. The anticipated drop in international natural gas production results from lower volumes from the Mari-B field offshore Israel where production is being carefully managed to bridge supplies to 2013 when Tamar is scheduled to begin production and from maintenance downtime at Alba which is expected to reduce the low-priced natural gas sales to the LNG plant. No adjustments have been made for the expected divestiture of non-core onshore U.S. assets.
U.S. volumes are anticipated to be up about 22 percent from 2011. The Company's onshore development programs in the central DJ Basin and Marcellus Shale, as well as new field additions in the deepwater Gulf of Mexico are expected to drive this growth. Production from non-core assets is anticipated to decline due to limited investments. The international portfolio is expected to grow approximately three percent from last year, largely due to higher liquids volumes from a full year of Aseng production in Equatorial Guinea. This increase is partially offset by lower natural gas sales in Israel and by the planned downtime at the Alba facilities in Equatorial Guinea as mentioned above.
For the first quarter 2012, the Company expects sales volume to average 228 to 236 Mboepd, broadly flat with the fourth quarter 2011. Crude oil and condensate should be up 17 percent from the fourth quarter of 2011 with a full quarter of production from Aseng and continued development activity in the DJ Basin. Natural gas, however, should be down nearly eight percent due to lower Mari-B deliveries and maintenance downtime at Alba.
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