Noble (NBL) Gets Regulatory Nod To Build Leviathan Platform

Noble Energy (NYSE:NBL) finally received regulatory approval from the Israeli government to develop a fixed platform for the Leviathan field offshore Israel. The approved Plan of Development (“POD”) will allow a subsea system that will connect the production wells to a fixed platform located offshore with tie-in onshore in the northern part of Israel.

Noble Energy believes that the fixed platform will provide several benefits including allowing it to better match the timing of capital with the pace of contracted demand and can expand the scale of operation as per requirement. The fixed platform’s initial capacity is anticipated to be 1.2 billion cubic feet of natural gas per day (Bcf/d) and is expandable to 2.1 Bcf/d.

The Eastern Mediterranean provides an excellent opportunity for Noble Energy given its low-cost operation, abundant supply of natural gas and increasing regional demand. Noble Energy through 11 successful exploration and appraisal wells has discovered more than 40 trillion cubic feet (Tcf) of natural gas resources in the Levant Basin.

Natural gas demand in Israel will increase going forward as coal-fired power stations are increasingly being replaced by natural gas plants for the generation of electricity. The Leviathan field will act a second source of gas supply for meeting the rising demand for this fossil fuel in Israel.

Noble Energy operates Leviathan with a 39.66% working interest while its other partners are Delek Drilling with 22.67%, Avner Oil Exploration with 22.67%, and Ratio Oil Exploration (1992) Limited Partnership with the remaining 15%.

Noble said that it has signed a gas sales and purchase agreement (GSPA) to supply natural gas from the Leviathan field to IPM Beer Tuvia Ltd (IPM). Per the GSPA, Noble Energy and its Leviathan partners will supply a gross quantity of up to 473 billion cubic feet of natural gas to the independent power facility over an 18-year term. Total gross revenue under the contract is estimated to exceed $2.5 billion.

In Israel, Noble Energy’s sales volume of natural gas was 266 million cubic feet (Mmcf/d) equivalent per day in the first quarter of 2016, up 10% year over year. Without any doubt, the sales volume will go up further in the coming years, thanks to the fixed platform.

Noble Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the space are EP Energy Corporation (NYSE:EPE) , World Point Terminals, LP (NYSE:WPT) and Statoil (OL:STL) ASA (NYSE:STO) , all carrying a Zacks Rank #2 (Buy).

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