Noble Energy Inc. (NBL - Analyst Report) released revised production volume estimates for its Denver/Julesburg (DJ) Basin operation for the upcoming quarters after the impact of the devastating northern Colorado flood in early Sep 2013. About 4% of the company’s operated wells are still shut-in.
Noble Energy expects overall net production loss for the third quarter 2013 of approximately 2 thousand barrels of oil equivalent per day (MBoe/d), on an average. Of the total production loss, 70% comprises crude oil, condensates and natural liquids.
Access to certain operational areas is still limited delaying Noble Energy’s completion activities. Operational lag and well shut-ins will jointly impact the company’s fourth quarter 2013 volumes by roughly 5 to 7 MBoe/d on an average. About 80% of this will be liquid volumes.
However, Noble Energy’s post-flood operation scenario looks encouraging as drilling activities have returned to normal levels with every rig operating at full capacity. In addition, the company is functioning at production levels higher than the pre-flood volumes owing to prolific drilling in the basin.
Noble Energy completion activities are progressing well and will eliminate its backlog by the end of the first quarter 2014. The company is currently focused on restarting production at the wells that were closed prior to the floods as soon as possible.
The adverse impact from the flood will be at most short lived. Noble Energy’s timely restoration of activities in the DJ basin bears testimony to its efficient management skills.
We believe additional discoveries in the Gulf of Mexico and promising natural gas prospects from the company’s Eastern Mediterranean operations will support Noble Energy’s future growth objectives.
Other potential domestic assets that will likely drive the company’s long-term growth include the Kyoto gas plant in northern Colorado and the Tioga gas plant in North Dakota, which are expected to come into service by 2014 and 2015, respectively.
Nonetheless, volatility in oil and natural gas prices will remain a concern for Noble Energy. Currently, the company carries a Zacks Rank #3 (Hold).
However, other better-placed industry players include Zacks Ranked #1 (Strong Buy) Matador Resources Co. (MTDR - Snapshot Report), Stone Energy Corp. (SGY - Analyst Report) and Devon Energy Corp. (DVN - Analyst Report).