Houston-based producer Noble Energy said Wednesday it expects to see its 2017 US onshore oil and gas production grow by 15% compared with 2016 on a full-year basis, and to be 25% higher when comparing the second half of 2017 versus the same period in 2016.
In a conference call, held to provide an outlook for 2017 through 2020 and an update on its Noble's US onshore operations, company officials said they expect total volumes in 2017 to average between 400,000 b/d of oil equivalent and 410,000 boe/d, up from 2016 after adjusting for divestment impacts which total nearly 20,000 boe/d.
Noble looks to continue to post strong crude oil production growth, continuing a trend the company has seen over the last several years, Chairman, President and CEO David Stover said on a conference call.
"The spotlight will be on our leading onshore business, underpinned by tremendous oil growth. I'm proud of what we've accomplished in the past two years," he said.
The production growth will largely be driven by increases in US onshore volumes, particularly in the Delaware and Denver-Julesburg basins, he said.
Through 2020 Noble expects to increase its crude production from its US onshore assets at a compound annual growth rate of 23% in the company's base plan, and 29% in the upside plan.
In the US onshore business segment, production is expected grow at a rate of 13% to 16%, adjusted for divestitures.
Noble anticipates its total company production to reach between 540,000 boe/d and 625,000 boe/d in 2020, an 8-12% growth rate, adjusted for divestitures, Stover said.
The 2020 sales volumes assume the company will be on track to start natural gas production from the Leviathan field, in the Eastern Mediterranean offshore Israel in January, as scheduled.
Stover said about 75% of the company's total capital is allocated to the development of its DJ Basin, Delaware and Eastern Mediterranean assets over the four-year plan period, while Noble will target 70% of its 2017 preliminary upstream capital expenditures for its US onshore activities, primarily in the DJ Basin, Delaware and Eagle Ford Shale plays.
COMPANY PLANS GROWTH IN ALL SEGMENTS
The company expects to grow production in each of its distinct business segments -- the US onshore, the Gulf of Mexico and West Africa offshore and the Eastern Mediterranean -- Stover said.
"In the onshore US we have over 7,000 future drilling locations with a total resource of over 7 billion barrels of oil equivalent. Most of these wells will be long laterals allowing us to continue to optimize our acreage position in every onshore basin," he said. "Our onshore business is a growth engine providing decades of inventory for Noble Energy."
Noble expects its combined Delaware and Eagle Ford production volumes to range between 165,000 and 195,000 boe/d by 2020, up 160% to 200% from 2016 volumes.
In the Wolfcamp A play of the Delaware Basin, the company had raised its per-well estimated ultimate recovery to 1.2 million boe for a 7,500-foot lateral.
In the DJ Basin, Noble expects total sales volumes to grow at an 11% to 16% CAGR over the plan period. The company has raised its per-well EURs by an average of about 20% in the Wells Ranch, East Pony and Mustang operating areas.
"Our Gulf of Mexico and West Africa producing assets are generating significant free cash flow annually, as a result of recent major project startups and near-term investments. This provides substantial capital flexibility for our onshore business," Stover said.
"It's our Eastern Mediterranean business that really sets us apart. It's an asset that today generates substantial free cash flow with a line of sight to the major project development at Leviathan," he said.
CAPITAL EXPENSES TO FOCUS ON US ONSHORE
Gary Willingham, Noble's executive vice president of operations, gave an update on the company's US onshore business, which he said would "account for the vast majority of our capital investments through 2020."
Willingham cited "a lot of positive developments" that the producer has seen over the last several months, including the completion in July of the acquisition of rival Permian Basin producer Rosetta Resources, the dissolution of a joint venture to develop Marcellus Shale assets that Noble had held with Consol Energy, as well as the sale of non-core property assets. "That's a lot of progress in a short period of time," he said.
The company's US onshore assets will provide Noble with "decades of inventory with robust economics, a great resource base and tier-leading results," Willingham said.
He pointed to expected growth in "high-margin liquids production" underpinned by increased output from the Delaware, DJ and Eagle Ford plays.
Noble is expected to finalize and release a formal budget and capital program early in 2017.
