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Noble Energy to Up Pipeline Solution for Gas Export to Egypt

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Noble Energy Inc. (NBL - Free Report) announced that it has executed multiple agreements to support the delivery of natural gas from the Leviathan and Tamar fields, offshore Israel, into Egypt. The company expects to commence operation of the Leviathan field by 2019-end and anticipates to sell a minimum of gross 350 million cubic feet of natural gas per day to contracted customers in Egypt.

Also, Noble Energy is all set to invest approximately $200 million in Eastern Mediterranean Gas Company S.A.E., which owns the EMG Pipeline, to acquire a 10% indirect interest in the EMG Pipeline. The transactions are expected to close by early 2019. The EMG Pipeline is nearly a 90-kilometer (56 miles) pipeline located primarily offshore, which connects the Israel pipeline network from Ashkelon to the Egyptian pipeline network near El Arish.

Noble Energy’s Position in Israel

Noble Energy is currently focused on strengthening its operations in Israel. Further, the possibility of extracting higher gas volumes from the existing assets of the Tamar Field is expected to bode well for the company along with growing demand of natural gas in the Eastern Mediterranean region. Per management, higher recovery of gas from Leviathan at the end of 2019 and the continued operations in Tamar Field are likely to boost Noble Energy's activities in Israel.

The company is targeting 1 billion cubic feet per day of volume under contract as and when it starts operation from Leviathan late next year. Courtesy of rising demand in the surrounding areas, the company has been able to secure long-term contracts of 900 million cubic feet per day (MMcf/d).

This improvement in gas demand was owing to addition of industrial customers in Jordan and higher Israeli demand on the back of the government mandate of reducing coal-fired power generation.

Going Ahead

Noble Energy expects to invest in the range of $700-$775 million during the third quarter. Also, the company plans to incur a capex of $3,000 million for the full year. Nearly 70% of the planned outlay is directed toward developing U.S. onshore assets. The higher number of wells brought online in the DJ Basin, Eagle Ford and Delaware areas will ramp up production output. In this context, the U.S. onshore production is expected to contribute a major portion of Noble Energy’s total yield.

In addition to organic growth, the strategic acquisition of Rosetta Resources has enhanced the company’s presence in the resource-rich Eagle Ford Shale and Permian Basin. Noble Energy has completed the buyout of Clayton Williams Energy, Inc. and further cemented its position in onshore U.S.

Moreover, natural gas volumes are anticipated at 880-910 million cubic feet of natural gas per day while natural gas liquids (NGLs) are expected to be between 59 thousand barrels per day (MBbl/d) and 64 MBbl/d in third-quarter 2018. For the full year, production is expected to be around 915-930 million cubic feet of natural gas per day and NGLs in the 62-66 MBbl/d band.

Price Movement

Year to date, shares of Noble Energy have outperformed the industry it belongs to. The stock has gained 6.8% compared with the industry’s growth of 1.4%.

Zacks Rank & Stocks to Consider

Noble Energy currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are Denbury Resources Inc. (DNR - Free Report) , Northern Oil and Gas, Inc. (NOG - Free Report) and Viper Energy Partners LP (VNOM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Denbury Resources came up with an average beat of 162.86% in the preceding four quarters. The Zacks Consensus Estimate for current-year bottom line has been revised 20% upward to 48 cents per share over the past 60 days.

Northern Oil and Gas pulled off an average positive surprise of 138.54% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has moved 34.2% north to 55 cents per share over the past 60 days.

Viper Energy Partners delivered an average earnings surprise of 6.71% in the last four quarters. The Zacks Consensus Estimate for current-year earnings has been raised 72.8% to $2.54 per unit over the past 60 days.

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