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Noble Energy Buys Stake in Shell's Offshore Colombia Assets

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Noble Energy Corporation (NBL - Free Report) announced that it has acquired a 40% interest in Royal Dutch Shell’s (RDS.A - Free Report) two offshore blocks in Colombia. The company will also operate the blocks, per the agreement. The financial details of the transaction are not yet disclosed. Courtesy of this purchase, Noble Energy will operate Caribbean COL-3 and GUA OFF-3 blocks, which cover more than 880,000 hectares.

Noble Energy’s Offshore Expertise Helps

Although Shell will retain the majority interest in these offshore blocks, Noble Energy has been entrusted with the authority to operate the oil-rich offshore blocks. At present, Noble Energy operates offshore assets in West Africa and Eastern Mediterranean. The company’s existing expertise and knowledge to operate offshore oil and gas assets will definitely help it to manage the offshore South American assets.

Both the companies are expected to invest nearly $100 million for the exploration and development of the offshore Columbian blocks. The exploration of these offshore assets will support Columbia’s goal of increasing its existing reserves to a level that will cover at least 10 years of Columbian oil consumption.

Boost in Columbia’s Oil Export

The development of offshore oil reserves by two large companies can have a positive impact on Columbia’s total oil production and export volumes. Columbia’s oil export volumes averaged 444.400 barrels per day from December 1995 to 2017, and the new development will definitely aid in oil production and exports.

Recently, Colombia has modified offshore oil and gas exploration contracts, and relaunched bidding for more than 20 possible production areas. Companies like Exxon Mobil (XOM - Free Report) and Anadarko Petroleum Corporation , among others, have shown interest in developing offshore blocks in Columbia.

Noble Energy’s Goal

Noble Energy remains focused on aligning the business to drive sustainability through commodity cycles. One of the objectives of the company is to deliver 5-10% long-term growth on an annual basis, supplemented by additional growth, as major projects come online.

The company has plans to test nearly 1 billion barrels of net risked exploration inventory by drilling both onshore and offshore opportunities in 2020. The 40% interest in Shell’s offshore Columbian assets will definitely expand Noble Energy’s test areas and inventory volumes.

Price Movement & Zacks Rank

Noble Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have outperformed its industry in the past three months.

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