Noble Energy Inc., (NYSE: NE) executives don't have a crystal ball. Instead, the Houston-based company has held its own through steady growth, smart acquisitions and the unwavering desire to be an exceptional producer. "I wish I could say it was because we knew what was coming with the market, but it wasn't," says Chuck Davidson, chief executive officer. "We just knew we wanted to be efficient and effective and one of the best at finding and producing hydrocarbons." Every move Noble makes is designed to rebuild the company for the long term and improve value creation, Davidson told an audience at an IPAA/Tipro program in Houston. Part of the plan includes the recent acquisition of Denver-based Patina Oil & Gas. "Basin maturity in the U.S. is what's driving producer strategy now. Then there's industry consolidation and a serious focus on returns. Oil-service costs are going up and there are increasing concerns about resource constraints." He also mentioned the widespread concern about the aging energy workforce. "If you look at where we are now [with our workforce] it looks like 1977-scary and aggressive times in our industry. But we had the baby boomers back then to pick up the slack-not this time." With so much working against producers, Davidson said a balanced asset portfolio is key. The $3.4-billion acquisition of Patina is in line with Noble's strategy for added staying power. In evaluating Noble's growth potential, executives at the company recognized its continued success in international projects. But Noble was too deep on Gulf of Mexico gas and relying too heavily on exploration. In 2000, Noble's exploration focus was split between the Gulf, 64%; domestic onshore, 23%; and the North Sea, 6%. Pro forma the Patina deal, domestic onshore is approximately 49% while the Gulf drops to 23% and the North Sea, to 5% at year-end 2004. "Patina fills a large gap in the puzzle by strengthening our domestic asset base. It is strictly domestic and it has the depth of technological experience that will allow us to explore throughout the world." Patina also brings experience in Rockies exploration and unconventional tight-gas development. "This merger is going to make a tremendous difference in our North American production." The crown jewel among Patina's Rockies and Midcontinent assets is the Wattenburg Field in Colorado, one of the 10 largest fields in the U.S. In 2004 its cumulative production was approximately 500 million BOE. It contains 152 million of proved reserves, 68% gas. The company also has more than 800 projects in the Midcontinent. "We are continuing with our major international projects; our domestic operations have dramatically improved; and we have substantial free cash flow to explore new opportunities and reduce debt. We are definitely a stronger, more balanced company."
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