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Noble Energy Inc. (NBL - Analyst Report) announced drilling results from its Paraiso-1 exploration well in offshore Nicaragua. Situated in the Tyra Bank concession area in a water depth of 1,220 feet, the well was drilled to a total depth of 10,415 feet.

The Paraiso-1 well is the first deepwater project carried out by Noble Energy off the coast of Nicaragua and is considered to be a new frontier exploration concept in the region. The company holds a 70% working interest in the prospect while the allocation of the remaining interest to other parties is subject to government sanctions.

Despite showing hydrocarbon potential and tertiary-age carbonate reservoirs in the early stage, drilling results at the Paraiso-1 well were a bit disappointing as the company did not encounter any hydrocarbon accumulation.

However, Noble Energy is optimistic and noted several positive observations during drilling. It plans to incorporate the information collected from the well into their regional geologic model to examine the possibility of any future prospect from its over two million offshore acreage position in Nicaragua.

The exploration cost incurred during the drilling activities will not impose any additional cost burden on Noble Energy since the company has already included seismic acquisition and processing, unsuccessful well costs, and other geologic and geophysical expenditures in its fourth quarter 2013 exploration cost guidance.

Fourth quarter total exploration expense is expected to be in the range $225 million to $265 million. The fourth quarter exploration expense guidance indicates that the full year number would come in on the lower end of the original guidance.

Although Noble Energy suffered a minor setback in the Nicaragua prospect, we believe its diversified global exploration portfolio will contribute to a steady revenue stream. The company’s operating assets at the Eastern Mediterranean and West Africa region will present attractive long-term growth opportunities in the future.

Currently, Noble Energy carries a Zacks Rank #3 (Hold). Other oil and gas counterparts looking good include Zacks Ranked #1 (Strong Buy) Abraxas Petroleum Corp. (AXAS - Snapshot Report), Matador Resources Company (MTDR - Snapshot Report) and Bonanza Creek Energy, Inc. (BCEI - Snapshot Report).

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