Noble Energy is strengthening its position in Weld County, growing its production and expanding its infrastructure — moves which company officials say could knock out some smaller players down the road.
For the third quarter of the year, Noble reports an increase in production to 97,000 barrels of oil equivalent per day out of the Wattenberg alone, which includes oil, natural gas and natural gas liquids. Of that, 61,000 came directly from horizontal drilling.
Production increased 90 percent from the second quarter and 31 percent from the same time last year, according to its earnings reports.
“We’re not where we are today by accident,” said Chuck Davidson, Noble’s CEO and chairman, in a third-quarter conference call with analysts Thursday. “We arrived here through a unique strategy. … We established ourselves as a diverse company excelling in two lines of business: onshore and offshore exploration.
“We’re positioned extremely well today with onshore, with core positions in premiere oil and natural gas plays that deliver.”
Company officials reported they look at onshore development, such as the Denver-Julesburg Basin in Colorado and the Marcellus play in southern Pennsylvania and Virginia, as major developments that will keep Noble competitive for years to come.
“The third quarter was another record-setting quarter,” Davidson said in a news release. “I continue to be excited about our strong growth outlook, led by the DJ Basin and Marcellus Shale plays.”
Noble added seven new pads in the Marcellus Shale, which contributed to record volumes there, according to the release.
Together, the Marcellus and DJ areas put out 125,000 barrels of oil equivalent per day on average, a 16 percent increase from the last quarter and a 35 percent increase from a year ago, reported David Stover, Noble’s COO.
Davidson spelled out Noble’s recent efforts in the growing drilling fields of Weld County, with an integrated development plan that centralizes its operations throughout the fields.
The company just completed building its new Wells Ranch processing facility, and completed a major land swap with Anadarko Petroleum that will essentially confine the companies to their delineated regions. The swap pulls the companies closer to their own operations, basically drawing a diagonal line from western Weld county to southern. Noble is now concentrated on the northern and eastern portions of the county, while Anadarko is now solely concentrated on the western and southern portions of the county.
“It will ultimately be a competitive advantage in onshore resource plays,” Davidson said of the land swap. “Smaller players with more scattered acreage may still be able to till good wells, but they will lose long-term competitiveness to higher infrastructure and operating costs.”
The central processing facility will allow for more efficient development by consolidating facilities and reducing land use and truck emissions, the company reported.
“The startup of our central processing facility in the third quarter is a significant milestone for Noble,” Stover said. The facility will be able to process 22,000 barrels of oil equivalent per day and 50 million cubic feet per day of natural gas.
“We have plans to double that capacity by next year,” Stover said.
Noble is operating seven horizontal drilling rigs in the greater Wattenberg area and two in northeastern Colorado.
During the quarter, 91 operated horizontal wells were started, of which seven were extended-reach lateral wells, meaning experimental in the length of the well as it is drilled parallel to the surface.
Two other companies that drill in Weld County reported third quarter earnings this week:
» Whiting Petroleum reported a production increase of 12 percent from the same time last year.
“At our Redtail prospect in the DJ Basin, our new completion design continues to generate very strong and consistent results,” the company reported in its earnings release.
Whiting reported it was selling assets in Texas for $150 million to focus more of its efforts in Colorado and the Williston Basin in North Dakota. The company had planned on adding a third drilling rig to its drilling in northeastern Weld County to capitalize on an additional 32,000 plus acres it has added to its portfolio.
According to its third quarter earnings release, the company plans to add a fourth rig in January, and a fifth in June 2014.
» Encana Corp. reported in its earnings call that it would add a fifth rig to its drilling in the DJ Basin before the end of the year.
“The annualized production impact from our DJ Basin wells being shut in during the Colorado flooding is expected to be minimal at about 250 barrels per day of oil in NGLs. We’re still assessing the potential impact on the new wells that are scheduled to come out during the fourth quarter,” the company reported in its release.