Noble Energy, Inc. (NYSE:NBL) has a 31% working interest in the Gunflint oil field in the Gulf of Mexico. Recently, it announced an appraisal of a second well in the region. The well has a gross resource of 65 million-90 million barrels of oil equivalent. The net cost of drilling this well is estimated to be $15 million. Drilling will also strengthen Noble Energy, Inc. (NYSE:NBL)‘s plan of subsea tieback development. These developments maximize the life of oil and gas producing infrastructure, thereby reducing the cost. The production from this well is expected to start in 2015 and will contribute $200 million-$300 million to Noble Energy, Inc. (NYSE:NBL).
and Sinochem International have been working on the development of Wolfcamp Shale for the past few years. As a part of the developmental work, both companies have entered into a transaction in which Pioneer Natural Resources (NYSE:PXD) agreed to sell 40% of its working interest in the Wolfcamp Shale to Sinochem. Prior to this transaction, Pioneer had 207,000 net acres in the region.
Both these companies have also agreed on a development plan of drilling 86 wells in 2013, 120 wells in 2014, and 165 wells in 2015 in the Wolfcamp Shale. These wells will be a major contributor to Pioneer’s revenue as it is expected to generate $3.6 billion, $4.6 billion, and $5.5 billion in 2013, 2014, and 2015 compared to $2.8 billion in 2012.
Additionally, Pioneer has approximately 900,000 net acres in the Permian Basin. As of now, the company has proved reserves of almost 640 million barrels of oil equivalent in this area. In order to fully utilize this huge resource potential, the company has laid out a drilling program in which it will add 3-5 rigs every year up to 2015. As such, Pioneer will spend $1.65 billion as capital expenditure in 2013. This will increase the company’s overall oil production to 115 million and 140 million barrels per day in 2013 and 2014 respectively from 91 million barrels per day in 2012.
Marathon’s incremental production in the Eagleford Shale will improve its top-line. Additionally, its announcement of a buyback program makes it a buy for income investors.
The change in Israel’s government export policy will facilitate the completion of Noble’s transaction with Woodstock Holdings Inc (OTCMKTS:WSFL). Also, its constant drilling of wells in the Gunflint oil field will increase its production.
The huge resource potential of Pioneer in the Permian Basin and its joint venture with Sinochem sets a platform for it to increase its oil production in the future.
Therefore, both these stocks are a buy for long-term investors.
The article Increasing Production From These Oil and Gas Producers Could Produce Returns for You originally appeared on Fool.com and is written by Madhu Dube.
Madhukar Dubey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Madhu is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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