Noble Energy Inc. (NBL) continued its drilling success in the deep water Gulf of Mexico through the discovery at its Santiago exploration prospect. Santiago is the third successful finding for Noble in its Galapagos project, following prior successes at Santa Cruz and Isabela.
The Santiago finding is located on Mississippi Canyon Block 519, with a total drilling depth of 18,920 feet, which includes water depth of 6,500 feet. The open hole logging suggested 60 feet of oil pay in a high-quality Miocene reservoir. The drilling results were in line with pre-drilling expectations with crude oil constituting around 75% of the discovered resource.
All the three wells at Galapagos are expected to come on line in early 2012 and boost the company's daily production by 10,000 barrels of oil per day. The total production of Noble Energy at the end of 2010 was 216 thousand barrels of oil equivalent per day (MBoe/d).
The Santiago well is jointly operated by numerous players and Noble Energy has 23.25% working interest in the well. The other operators are Houston Energy, L.P. with 10% working interest, Red Willow Offshore, LLC with 20.25%, and BP Exploration & Production Inc., a wholly owned subsidiary of BP America Inc., with the remaining 46.5% stake.
Once the drilling ban was lifted in the Gulf of Mexico, the company resumed drilling operation in the region from April 2011. After completing drilling at Santiago, Noble will proceed with its drill plans in the Deep Blue prospect and follow that up by spudding an appraisal well at the Gunflint discovery.
The Santiago drilling success comes in the wake of disappointments witnessed by the company at the Leviathan #2 well offshore Israel. We are hopeful that these Gulf of Mexico discoveries would give a positive impetus to the company and aid in the increase of total production in the years to come.
Noble Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain a Neutral rating on the stock. The company competes with Anadarko Petroleum Corporation (APC).
Based in Houston, Texas, Noble Energy operates internationally and engages in the acquisition, exploration, development, production, and marketing of crude oil, natural gas and natural gas liquids.
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