Noble Energy plans to perform its next round of deep sea drilling at its Leviathan field next year in the hopes of finding oil, the company told investors during a phone conference last week to discuss its second-quarter earnings.
The company stopped drilling activity at Leviathan 1 about two months ago and had not until now said when it would resume, if at all.
In upper strata of the Leviathan field the company and its partner found vast quantities of natural gas a year-and-a-half ago. Investors have since been waiting to hear the result of drilling that would indicate whether there is also oil lying further below. If Noble finds any, it would be the first-ever find in the Mediterranean Sea.
Noble, the leading partner in all the gas consortia drilling off the Israeli shoreline, has a 47% stake in the nearly depleted Tethys Sea field. In the Tamar field, which is expected to begin production in 2013, it has a 36% holding and in the giant Leviathan field, the company owns 40%.
The company also has energy interests in its home country, the United States, as well as in Africa and the North Sea.
Last week, Noble reported that its second-quarter 2012 net income reached $292 million, or $1.58 a share diluted, down from $294 million, or $1.61 a share, the same time in 2011.
Revenue climbed 15% to $966 as oil sales grew, while natural gas sale declined because of lower volumes at the Mari-B reservoir offshore Israel, Noble said. Higher exploration costs cut into operating profit, which dropped 39% to $138 million.
Until the start of 2011, about 40% of Israel's electrical power was fueled by natural gas coming from Tethys Sea and from Egypt. The revolution in Egypt ended up cutting off deliveries of gas from that country, putting pressure on Tethys Sea to take up as much of the slack as possible.
Some smaller finds offshore Israel have since been discovered, but Tethys Sea is being depleted very quickly while the bigger Tamar field will only go online next year.
Noble said last week that it expects during the current quarter to maintain a production rate of 200 million to 250 million cubic feet daily to Israel by pumping gas from the tiny Noa and Pinnacles fields.
"Our work won't be over after we have developed Tamar," Noble CEO Chuck Davidson said. "Home demand in Israel continues to grow and we are working on additional solutions for fulfill it. Concerning Leviathan, we are investigating additional test drilling for gas by the end of the year. We plan to direct Leviathan to supporting the Israeli market in 2016 and after that top direct it to exports."
Noble says it intends to recruit a new partner for Leviathan by the end of the year. "The discussions continue," Davidson said. "Several companies have already visited our data room and several others plan to visit in the next several weeks ... We are optimistic concerning our two plans - exports and sales to the local market. We have lots of possibilities."
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