Noble Affiliates has continued a rapid pace of drilling in the third quarter. In the first two months of the third quarter, 43 wells have been decisioned with an overall success rate of 77 percent. Year-to-date, the company has decisioned 181 wells with 144 of those wells being discoveries for an overall success rate of 80 percent.
Key wells for which drilling has been completed in the third quarter are as follows:
- The Runnels No. 5 in Matagorda County, Texas was completed and tested at a rate of 21 million cubic feet of gas per day and 710 barrels of condensate per day. Runnels No. 5 is a follow-up to the Runnels No. 3 discovery. Noble Affiliates holds a 24 percent working interest in both wells.
- The Swan project, which is located offshore Vietnam Block 12W, was drilled and tested at a rate of 20 million cubic feet of gas per day with 150 barrels of condensate per day. Noble Affiliates has a 60 percent working interest in the 567,000-acre block. Noble Affiliates and its partners in the project are acquiring a 3D seismic survey over the Swan prospect to aid in the planning of a confirmation well scheduled for 2002.
- The Mound Point prospect, located offshore Louisiana State Lease 340, was drilled to 18,704 feet, logging two potential pay sections. Production casing has been run and a completion and testing program is being designed. Noble Affiliates has a 25 percent working interest. Four other key exploratory wells have been decisioned dry in this quarter. These are the LeBlanc No. 1 in Louisiana's Acadia Parish; the F-5 well in the Dutch sector of the North Sea; Viosca Knoll 737 No. 2 in the deepwater Gulf of Mexico; and West Delta 143, a deep gas well in the Gulf of Mexico shelf area.
It is anticipated that several of the following wells that are currently drilling may be decisioned by the end of the third quarter.
- The Lark prospect, located offshore Vietnam, on Block 12E began drilling immediately following testing of the Swan discovery. Noble Affiliates has a 60 percent working interest in the prospect.
- The Wincanton prospect, located in the North Sea Central Gas Basin, in which Noble Affiliates has 100 percent interest.
- The Boris prospect in deepwater Gulf of Mexico's Green Canyon 282. Noble Affiliates has a 25 percent working interest.
- South Timbalier 207 on the Gulf of Mexico shelf. Noble Affiliates has a 40 percent interest in the project.
For the full year, Noble anticipates total exploration expense to be
between $140 million and $155 million. Because of the high exploration activity concentrated in the third quarter, the company anticipates exploration expense to be between $45 million and $55 million for the current quarter. However, the fourth quarter exploration expense is anticipated to decline because fewer wells are to be decisioned.
To support the company's investment programs, Noble Affiliates has entered into costless collar hedges covering 50 million cubic feet per day of gas production beginning in the fourth quarter of 2001 and continuing through 2002. The floor price for all quarters is $3.25 per MMBTU. The ceiling price for the fourth quarter is $4.60 and for 2002 the ceiling averages $5.07 per MMBTU. These hedges are pursuant to the company's policy of periodically entering into such transactions to stabilize the volatility of future cash flows caused by uncertain commodity prices.