Noble Energy Earnings Call Insights: Niobrara Completions and Tamar Phase 2

Noble Energy (NYSE:NBL) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Niobrara Completions

Evan Calio – Morgan Stanley: Question in the Niobrara, I know you completed 44 wells versus the 300 annual target. Should we expect completions to be backend loaded and can you help me understand the pace on the completion side? Then, I have a follow-up.

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Charles D. Davidson – Chairman and CEO: Well, the completions are somewhat as expected, were a little less than average in the first quarter with some of the weather, but as we mentioned, we’re bringing in – we’ve actually brought another rig in, in March and we’ve got another rig coming in this quarter. So, the activity will continue to ramp up through the year, and it won’t be so much backend loaded, but it will be continual, I’d say from this point forward.

Evan Calio – Morgan Stanley: My follow-up or second question is, I know you gave us a lot of data on Slide 9, on Northern Colorado, do you have any color on the wells drilled outside of East Pony and kind of what were the number of wells drilled outside that area in the quarter?

Charles D. Davidson – Chairman and CEO: No, I’d say it’s still too early for that. We’re just starting on some of that delineation up there. So, that will be towards the end of the year, before we really have a lot new insight on some of these, what I’d call appraisal areas.

Session 2:

Doug Leggate – Bank of America Merrill Lynch: Dave could I just ask you to elaborate a little bit on your plans for the phase 2 at Tamar and I guess what’s behind my question is I think in Chuck’s prepared remarks he talked about there was sort of a greater urgency to get that on stream quicker perhaps. Could you maybe just give us an update as to how you see the timeline there and if you could perhaps clarify some of the government noise around gas prices either released to future expansions for both (indiscernible) please? I had a quick follow-up.

Charles D. Davidson – Chairman and CEO: Sure, Doug. First on the second phase of Tamar; Tamar is – that phase is a combination of utilizing compression that we would install onshore as well as the utilization of Mari-B for storage and that’s what gives us that big uplift in capacity. I think Dave noted that it would raise the capacity to about 1.5 billion. Although we again just like at Tamar right now, we wouldn’t expect to be over average at that level but it raises the peak capacity. Again the key is both storage as well as compression to get there and again that project is expected to be ready to come on stream in 2015. It is actually needed to support the Israel Electric’s exercise of their option to expand their gas stake, so all of that is tied together. Our contract with Israel Electric provided for that option to expand and the pricing has already been set in that. So, when it gets to pricing in Israel, really we have got multiple contracts that have already gone through the government review and approval. So, it’s hard for me to really comment on any other things that are – maybe just more speculative in the media. We’re very confident in terms of what our pricing is for our Tamar project.

Doug Leggate – Bank of America Merrill Lynch: My follow-up will be quite quick. Are you now back funding to carry in the Marcellus and if not, can you give us an idea when you might be starting to pay for that? I’ll leave it there.

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Charles D. Davidson – Chairman and CEO: Well, it’s always hard to speculate on the forward curve, but again the contract provides that once Henry Hub prices average above $4 for three months, then our carry would come back on. So, if we look at the forward curve, we would expect that perhaps sometime in the third quarter, the carry would begin again. So, we’re enjoying the benefits of the increased gas prices and I would just say once again as we really like that structure in the contract and it really protected us and aligned our partnership when we went through this period of very low gas prices.

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