Fieldwood Production Leaps with Noble

Oilgram News Volume 96 / Issue 37 / Wednesday, February 21, 2018 The Americas

NOBLE ENERGY'S US GULF OIL OUTPUT Fieldwood production leaps with Noble buy ('000 b/d) 30 Company sees value in deepwater Gulf of Mexico exploration 25 Houston—Private Gulf of Mexico operator Field- Swordfish, and Galapagos, all offshore eastern wood Energy will see its producing asset base Louisiana. It also has two discoveries, Katmai 20 increase by more than 30% with the $710 mil- and Troubadour, and operates the Thunder 15 lion purchase of Noble Energy’s deepwater GOM Hawk and Neptune producing spar. assets, its CEO said. Fieldwood will acquire all these assets, as 10 well as several dozen exploration leases. McCarroll said the company’s operating 5 Includes fields producing 25,000 boe/d program has not been made public, but it plans 0 CEO says deep US Gulf economics work “a number” of US Gulf exploration and Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Wanted to grow in deepwater ‘for some time’ development wells this year. Source: Noble Energy The company, which is currently undergoing a corporate restructuring after properties, which Noble said had a book value And at a time when the Gulf of Mexico has accumulating what he called “too much debt” around $230 million at year-end 2017. become a neglected basin in the last few years during the recent two-year industry downturn, In addition, Noble will receive a as operators have focused on the glitz of quick- also plans to resume participation in offshore cumulative contingent payment of up to $100 return onshore unconventional fields, the US US Gulf lease sales after it emerges from million from the transaction closing date Gulf still has attractive economics, Matt Chapter 11 within 60 days. through the end of 2022, at a rate of $2/b McCarroll told Platts in an interview. Fieldwood has also brought its produced when the average Louisiana Light “The deepwater Gulf is an area we’d operating costs down by over 35% since Sweet oil price tops $63/b. been wanting to grow in for some time,” 2015, McCarroll added. Many upstream companies exited the Gulf McCarroll said. of Mexico deepwater as US shale activity “Our operating costs were substantially ‘Logic’ in US Gulf asset sale ramped up starting in the early-to-mid 2000s, less than $20 a barrel, and after the acquisition “We see the logic [of Noble’s Gulf of Mexico mainly in shale gas fields. will go down even further,” he added. “After sale] here as the asset was later in its life cycle, When producers began shifting their activity general and administrative costs and interest, and facing 15%-plus annual declines,” Evercore to producing shale oil around 2009-2010 as the it’s probably less than $30 [per barrel].” ISI Group analyst Stephen Richardson said in an price of oil ramped up to $90s/b and $100s/b, it Noble’s deepwater Gulf assets investor note. was a boon to those still operating in the US Gulf produced about 25,000 b/d of oil equivalent Fieldwood was created in 2012 with private as technology provided better imaging of large in the third quarter of 2017. Fieldwood’s equity money and the following year purchased oil reservoirs hidden deep beneath salt canopies production is currently around 80,000 Apache Corp’s shallow water Shelf assets for in remote areas offshore. boe/d, McCarroll said. $3.75 billion as the large operator exited its legacy The deepwater Gulf abounded in new field Noble, a longtime US Gulf explorer, said last Gulf operation to focus on US onshore fields. discoveries for several years after 2009. But week it would sell its deepwater assets to Of the $710 million purchase price for the as oil prices weakened and then plunged in Fieldwood, including six producing fields—Big Noble assets, $430 million is in cash. Fieldwood late 2014, the offshore US nearly became a Bend, Dantzler, Gunflint, Ticonderoga, assumes abandonment obligations for the ghost town as wildcat exploration virtually dried up. Noble Energy unveils three-year plan to boost sales Majors and a few dedicated operators that focused in the play concentrated on hunting for Houston—Noble Energy unveiled an ambitious centered around a $50/b oil price.” new oil near existing fields that had more of a three-year plan on Tuesday to raise company Potentially, sales volumes could be around chance of success and could be easily sales volumes nearly 75% from its core US 625,000 boe/d in 2023, Noble’s three-year connected to existing infrastructure. In contrast, onshore plays and the Eastern Mediterranean outlook presentation said. big stand-alone developments with new by 2020, while generating what its executives By 2020, more than 50% of sales volumes infrastructure carried multibillion-dollar price called “substantial” free cash flow. should come from US onshore liquids, up from tags and took as much as a decade to complete. Noble turned out 381,000 b/d of oil 30% in 2015, Stover said. Noble, which has large operations in the equivalent sales volumes in 2017 that included Much of that liquids growth stems from Permian Basin, DJ Basin, and Eagle Ford Shale, 104,000 b/d of crude oil and condensate. Pro Noble having divested non-core gas-oriented said it will use proceeds from sale of its US Gulf forma for divestitures, sales volumes were operations, largely the Marcellus Shale in assets to buy back $750 million of its shares, 303,000 boe/d last year. Pennsylvania, as well as making two significant as part of its plan to return more cash to But that should rise to an estimated acquisitions in recent years that bolstered its shareholders – a move producers are 348,000 boe/d in 2018, 400,000 boe/d in 2019 oil-weighted presence — Rosetta Resources in increasingly making as crude oil has shot and 525,000 boe/d in 2020 as productivity 2015 that marked Noble’s entry into the through $60/b this year. jumps from enhanced well completions from Permian Basin and Eagle Ford Shale in South Noble now plans to turn its attention to its the DJ Basin in Colorado and the West Texas Texas, and Clayton Williams Energy last year US onshore unconventional assets and also the Permian Basin, and startup of the giant that bulked up its western Permian profile. giant offshore gas fields it has discovered in Leviathan field offshore Israel in 2020. Company volumes are expected to grow the Eastern Mediterranean. In the meantime, “more than 95% of our 20%/year over the three years from 2018-2020, The company has a legacy in the US Gulf capital [over that period] will go to our US while it will spend roughly $2.8 billion of annual stretching back to the 1960s, but made its onshore and Eastern Med businesses,” Noble capital over that period, Stover added. By first deepwater US Gulf discovery in 2001 at CEO Dave Stover said during a quarterly contrast, the company had set $2.450 billion of the Lost Ark prospect offshore Texas in 2,700 earnings conference call. “Our outlook is capex for 2017. — Starr Spencer feet of water.— Starr Spencer