NOBLE ENERGY STOCK ANALYSIS: Permian Basin Oil and Israeli Gas


Today, we'll talk about a company which is at a good price but is not worth investing in, $NBL . Noble Energy is an $OIL and $NATGAS exploration company with operations in the US(Texas and Oklahoma), Israel and Equatorial Guinea. What really interest us are the US and Israeli operations.

59% of revenues come from the US where they operate mainly in the Eagle Ford shale and also the Permian Basin, both in Texas. As you know, the Permian Basin is the richest oil region in the world right now and by 2025, oil production in Texas will exceed that of Saudi Arabia or Russia, so it is a good time to invest in companies with operations in Texas. 29% of their revenues come from Israel. Unlike most of the Middle East countries, Israel didn't have an oil industry until 2004. It is only then, that they began exploiting their off-shore gas reserves. There is a booming gas production happening in the region called the Energy Triangle(Greece-Israel-Cyprus). However, the amount of gas in the region is limited compared to the Middle East or the US.

So far, Noble Energy seems to be doing great. They have operations in 3 of the booming oil/gas regions of the World: The Eagle Ford Shale, The Permian Basin and the Energy Triangle. I've looked at the price and I can say that they are at a good price. So what's wrong with this company? They are depleting their reserves at a fast rate without increasing it. If you look at companies like $CXO $PXD or $PE , they have all been acquiring new assets, building new wells, and increasing their proved reserves. This company, however, hasn't shown proof of growth in years. They could also acquire other companies but the amount of capital expenditure that they have will make this difficult.

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