Noble Energy Tags $2.5B Capex; 20% Earmarked for E&P
Noble Energy has reported its 2010 capital budget and guidance. The Company's total capital investment program is estimated at $2.5 billion, with 40 percent going toward major project developments, 20 percent for exploration and appraisal activities, and the remaining 40 percent for ongoing maintenance and near-term growth opportunities. Approximately 55 percent of the total is to be spent in the United States with the other 45 percent allocated to international activities.
Major project investments are expected to be about $1 billion, with the majority of capital directed toward the development of Galapagos in the deepwater Gulf of Mexico (GOM), Aseng offshore Equatorial Guinea, and Tamar offshore Israel. Approximately $500 million is allocated to exploration activities largely focused on plays where Noble Energy has a strong record of success. The program this year is targeting an estimated 700 million barrels of net unrisked resource potential with the drilling of seven high-impact offshore wells in the deepwater GOM, Equatorial Guinea and the Mediterranean Sea. The remainder of the capital budget is focused on liquid-rich and emerging opportunities onshore in the United States, as well as development projects in Israel, the North Sea and China.
"Our 2010 capital program is all about executing on our long-term growth projects, while maintaining our strong base of existing production. Over the last few years, we have discovered a substantial amount of resources through exploration in our three key offshore basins. The investments we are making in these discoveries will help drive significant multi-year production growth beginning in 2012. At the same time, continued investment in meaningful exploration remains a key component to our strategy, and we look forward to the 2010 program where we will be testing a number of the large prospects from our extensive worldwide exploration portfolio," said Charles D. Davidson, Noble Energy's Chairman and CEO.
Excluded from the capital budget discussed above is the $494 million purchase price for the DJ Basin asset acquisition scheduled to close late in the first quarter 2010, as well as $235 million of non-cash capital to be accrued for the Aseng FPSO capital lease.
Sales volumes for 2010 are projected to range from 211 to 224 thousand barrels of oil equivalent per day, with the midpoint of the range being up three and a half percent compared to 2009 production. United States volumes are anticipated to rise slightly due to onshore development activity and a partial year of production from the recently announced asset acquisition. This increase is somewhat offset by natural declines in the deepwater Gulf of Mexico. Despite planned facility downtime in Equatorial Guinea, the international portfolio is expected to show growth, largely due to increased natural gas demand in Israel and ongoing development projects in the North Sea and China.
"Our strong balance sheet plus current liquidity will provide support for this year's capital budget, which is anticipated to exceed 2010 cash flow from operations. As part of our strategic long-term growth plans, it is important for us to maintain a conservative balance sheet with the liquidity to fund our major project developments, future exploration success, and retain flexibility for opportunistic deals, no matter where we might find ourselves in the commodity cycle," said Kenneth M. Fisher, Senior VP and CFO for Noble Energy.
Approximately 80 percent of Noble Energy's expected 2010 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 floor price of $5.90 per thousand cubic feet. Crude oil hedges totaling about 35 percent of the Company's oil production have an average floor price of approximately $61.48 per barrel.
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