Noble Energy Inc. (NBL) proceeded with its Tamar Project, offshore Israel, embarking on a $1.1 billion (net to Noble) capital expenditure for the project. The gross capital expenditure for the project is estimated to reach $3.0 billion.
The project received approval from the Israeli government in August. Noble said that the project has received most of the key project components and plans to begin drilling by early 2011. Following the completion of installations and commissioning (in fourth quarter of 2012), the project is expected to provide initial deliveries of gas by late 2012.
The initial phase of Tamar development will include five subsea wells with a flowing capacity of 200 to 250 million cubic feet per day (Mmcf/d) of natural gas each. The gas produced at these wells will be collected and brought (via two 16-inch flowlines) to a new offshore platform, constructed next to the existing Mari-B structure.
This gas will then be delivered to an existing 30-inch pipeline that connects Mari-B to the Ashdod onshore terminal. The initial processing capacity is expected to be up to 1.0 billion cubic feet of natural gas per day.
The new platform would take advantage of the structural design of the existing and proven Mari-B platform. In addition, the development will allow for significant expansion as the market for natural gas grows.
The Mari-B platform is operated by Noble, with a 47.059% working interest. Other owners include Delek Drilling (25.5% interest), Avner Oil Exploration (23%) and Delek Investment (4.441%).
Israel’s Tamar field was discovered in 2009 and has estimated reserves of 8.4 trillion cubic feet of natural gas. The Tamar field is operated by Noble Energy, with a 36% working interest. Other partners in the field are: Isramco Negev 2 (28.75% interest), Delek Drilling (15.625%), Avner Oil Exploration (15.625%) and Dor Gas Exploration (4%).
The Tamar project is one of Noble’s important growth projects, which would contribute to the company’s proved reserves and earnings. We see Noble’s Tamar as a strategically important project for meeting Israel’s near-term gas needs, benefiting the company as well as the State of Israel.
Furthermore, we believe Noble’s well-balanced high-grade hydrocarbon portfolio, brilliant execution capability and competitive cost structure reflect visible upside over the long run. We believe Noble’s ongoing development projects ensure substantial growth, going forward.
Noble Energy currently has a short-term Zacks #3 Rank (Hold), which supports our long-term Neutral recommendation for the stock.
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