Noble Energy's capital investment program has been established at $1.6 billion and may be adjusted up or down by 10 to 15 percent, depending on commodity prices and economic conditions experienced throughout the year. This amount compares to capital spending, excluding property acquisitions, of $2.0 billion in 2008.
Approximately 40 percent of the 2009 budget is committed to longer-term projects that will provide considerable production growth several years in the future. The remainder is allocated toward maintaining and strengthening the existing property base. Development spending will focus on the company's international and deepwater Gulf of Mexico assets as well as certain higher return opportunities onshore in the United States. The exploration budget will center on significant resource potential in Israel, West Africa and the deepwater Gulf of Mexico. International expenditures are estimated to represent 30 percent of the total capital program, up from 15 percent in 2008.
"We are committed to our strategy of creating shareholder value. The budget this year is designed to invest more in longer dated growth as the near-term outlook for oil and natural gas demand appears weak. We have also built in added flexibility to allow us to alter our plans in this highly uncertain environment, while maintaining our financial discipline. A substantial amount of capital is allocated toward our international development projects and appraisal of our recent discoveries, as well as retaining a significant exploration program that is almost entirely directed toward high-impact prospects," said Charles D. Davidson, Noble Energy's Chairman, President and CEO.
The capital program should enable Noble Energy to deliver sales volumes of 212 to 220 thousand barrels of oil equivalent per day (MBoe/d) in 2009, which when using the midpoint of the range represents a slight increase over 2008. The international portfolio is expected to increase volumes about 8 percent largely due to the continued natural gas demand growth in Israel, additional development wells in the North Sea, and less facility downtime in Equatorial Guinea. United States production is anticipated to decline about 5 percent as a result of ongoing hurricane shut-ins, natural declines in the deepwater Gulf of Mexico and reduced drilling activity.
Noble Energy's ability to fund the 2009 capital budget is supported by strong cash flow aided by a beneficial hedge position and as applicable, cash balance of over $1 billion. Approximately 70 percent of the company's expected 2009 natural gas production is hedged or marketed under long-term pricing arrangements. All of the natural gas hedges are applicable to United States volumes with an average minimum price of $8.90 per Mcf. Crude oil hedges totaling about 35 percent of the company's oil production have an average minimum price of $81.86 per barrel.
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