Noble Energy Inc.'s drilling operations will focus on the "high-return" Delaware and DJ basins for the remainder of 2017 and the early part of 2018, company executives said Aug. 3.
As part of its refocus on domestic production instead of overseas operations, Noble closed on its $2.7 billion acquisition of Clayton Williams Energy during the second quarter, giving the company about 120,000 net acres in the rapidly growing Delaware Basin. That acreage, along with holdings in the D-J Basin, a play centered in Colorado, will be the primary operational targets for the second half of the year.
"Onshore drilling priority will be the high-return DJ and Delaware Basin programs that are in sync with the [Noble Midstream Partners LP] position," President and CEO David Stover said on the company's earnings call. "Already, through the first half of this year, our new well results are providing higher returns than originally anticipated based on stronger production performance more than offsetting any cost pressures."
Executive Vice President of Operations Gary Willingham said Noble had been able to slash costs in both plays as a result of technological improvements. "We continue to see tremendous drilling advancements, specifically in the Delaware and the DJ Basin, which are clearly driving substantial cost efficiencies," he said. "Our average 2017 drilling cost per lateral foot in these areas is down 20% to 30% compared to last year. We expect to further this track record of success as we advance new techniques that improve drilling efficiencies and lower costs."
With the addition of Noble's holdings in the Eagle Ford Shale, the company plans to bring more than 100 wells online during the second half of 2017. "We've got 35, plus or minus, in the Delaware in the second half and 55 to 60 in the DJ and 20 or so in the Eagle Ford," Willingham said.
Noble reported adjusted income of $24 million, or 5 cents per share, during the second quarter. That topped the S&P Capital IQ consensus estimate of a 13-cent normalized EPS loss.