Item 8.01. Other Events.
On February 23, 2017, Noble Energy, Inc. ("Noble Energy", the "Company", "we" or
"us") approved and sanctioned a final investment decision concerning the first
phase of development of the Leviathan field offshore Israel, with first gas
targeted for the end of 2019. Initial development of Leviathan will include four
subsea wells, each capable of flowing more than 300 million cubic feet per day
(MMcf/d) of natural gas. Initial Leviathan proved reserve bookings associated
with this investment of approximately 3.3 trillion cubic feet (Tcf) net (9.4 Tcf
gross) are expected to be recorded in 2017. This translates into approximately
550 million barrels of oil equivalent, net, representing an increase of over 35%
from our December 31, 2016 total proved reserves.
Production will be gathered at the field and delivered via two 73-mile flowlines
to a fixed platform, with full processing capabilities, located approximately
six miles offshore. The Leviathan platform will have an initial deck weight of
22,000 tons. Processed gas will connect to the Israel Natural Gas Lines Ltd.
onshore transportation grid in the northern part of the country and to regional
markets via onshore export pipelines. The approved development plan allows for
significant future cost-effective expansion from its initial 1.2 billion cubic
feet per day (Bcf/d) capacity to 2.1 Bcf/d.
We estimate gross capital for phase one of Leviathan development will be $3.75
billion ($1.5 billion net to Noble Energy), which includes approximately $100
million spent in 2016 and approximately $200 million pre-investment for future
platform expansion. Phase one of Leviathan can be funded from our Tamar
operating cash flows as well as Eastern Mediterranean portfolio proceeds.
Regional portfolio proceeds received to-date total approximately $575 million,
net. We are also in the process of securing access to a financing facility for
additional funding flexibility.
With front-end engineering and design complete, we are currently finalizing
major project contracts, and long lead materials procurement has begun. Noble
Energy and its partners anticipate drilling one to two Leviathan development
wells in 2017. Completion activity for all four producer wells, including two
previously drilled, is anticipated in 2018. We expect to complete project
installation and initiate commissioning in the fourth quarter of 2019, with
delivery of first gas targeted for the end of 2019.
We operate Leviathan with a 39.66% working interest. Other interest owners
include Delek Drilling with 22.67%, Avner Oil Exploration with 22.67%, and Ratio
Oil Exploration (1992) Limited Partnership with the remaining 15%.
Disclosure Regarding Forward-Looking Statements
This current report contains forward-looking statements within the meaning of
the federal securities laws. The statements above that are not historical facts
are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. Forward-looking statements
are typically identified by use of terms such as "may," "will," "expect,"
"believe," "anticipate," "estimate," "intend," and similar words, although some
forward-looking statements may be expressed differently. No assurances can be
given that the forward-looking statements contained in this current report will
occur as projected, and actual results may differ materially from those
projected. Some factors, risks and uncertainties that could cause actual results
to differ include: changes in government policies in countries in which we
operate, government regulation and other actions, the volatility in commodity
prices for crude oil and natural gas, the presence or recoverability of
estimated reserves, environmental risks, drilling and operating risks,
exploration and development risks, competition, the ability of management to
execute its plans to meet its goals and other risks inherent in the Company's
business that are discussed in its most recent annual report on Form 10-K and in
other reports on file with the Securities and Exchange Commission. These reports
are also available from the Company's offices or website,
http://www.nobleenergyinc.com. Forward-looking statements are based on the
estimates and opinions of management at the time the statements are made. The
Company does not assume any obligation to update forward-looking statements
should circumstances or management's estimates or opinions change.
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