Approximately 30 percent of the 2003 capital budget has been allocated for exploration opportunities, and 70 percent has been dedicated to production and development projects. Domestic spending is budgeted for $235 million, or 46 percent of the 2003 capital budget, and international expenditures are budgeted for $275 million, or 54 percent. The reduction in planned 2003 capital spending compared to 2002 takes into account expenditures for international projects originally scheduled for 2003 but incurred in 2002.
Our 2003 capital budget reflects the company's strategy of creating value through a combination of investments in our core U.S. properties as well as our high-impact international projects," stated Charles D. Davidson, Noble Energy's Chairman, President and CEO. "In 2002, we made significant progress with the start-up of our gas-to-power project in Ecuador and the completion of the decks and facilities for our natural gas project in Israel. In early January 2003, we commenced crude oil production in China and installed our platform in Israel. During the remainder of 2003, we expect to start natural gas production in Israel and complete the Phase 2A development project in Equatorial Guinea."
Noble Energy's 2003 domestic capital budget is $235 million, with approximately two-thirds earmarked for the offshore division and one-third for the onshore division. The offshore division's spending calls for a split between exploration, at 56 percent of the division's budget, and production and development, at 44 percent. For the onshore division, exploration expenditures are expected to represent 80 percent of the division's budget, primarily on properties in the Gulf Coast area.
Of the $275 million international capital budget for 2003, 87 percent is dedicated to production and development projects. Planned expenditures have been allocated to the four regions where Noble Energy is most active as follows:
In Equatorial Guinea, Noble Energy expects to spend approximately $180 million, primarily to complete the Phase 2A Alba field development project. Phase 2A is scheduled to be completed by the end of 2003. Upon completion of Phase 2A, gross condensate production from the Alba field will increase to approximately 46,000 barrels of oil equivalent per day (Boepd) from current production of nearly 18,000 Boepd. A second development phase, Phase 2B, is scheduled to be completed by the end of 2004 and will increase gross condensate and liquefied petroleum gas production by approximately 6,000 Boepd and 14,000 Boepd, respectively.
Capital expenditures in Israel are budgeted to be approximately $60 million for 2003, with 70 percent of spending set aside for production facilities and platforms. Natural gas production is expected to commence at 40 million cubic feet per day (MMcfpd), net to Noble Energy, during the fourth quarter of 2003. Net incremental production is projected to increase another 30 to 50 MMcfpd through 2004.
Average barrels of oil equivalent production in 2003 is expected to increase in a range from four percent to 12 percent compared to the full year 2002. The company expects its 2003 exit rate for production to be 15 percent to 20 percent higher than its 2002 exit rate. Noble Energy's production profile will be impacted by several factors, including:
Major international projects scheduled to start production this year include:
Compared to the full year 2002, costs and expenses may vary as follows:
Noble Energy has begun a process of reviewing and rationalizing its asset portfolio to allow future focus on high-quality, core properties with significant upside potential. Once the asset reviews are complete, properties identified as non-core may be packaged for sale. Noble Energy expects any non-core property sales to be completed in the second half of 2003.
The above estimates do not include the impact of Noble Energy's asset rationalization program, or the impact of any associated asset purchases or sales.
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