Despite reporting a 47% year-over-year plunge in fourth-quarter earnings due in part to sharply higher operating expenses, Noble Energy's (NBL) onshore U.S. assets delivered yet another solid quarterly performance. Results from its operations in Colorado's DJ Basin were particularly impressive, with fourth-quarter volume up 16% year over year.

Going forward, the company's DJ Basin production should increase at an even faster rate due to improvements in infrastructure and efficiencies resulting from the company's integrated development plan, or IDP, approach. Let's take a closer look.

Infrastructure improvements
Though it has interests in offshore projects all over the world, Noble's biggest growth driver over the next few years will be the DJ Basin. The company's fourth-quarter production volume from the play averaged 100,000 barrels of oil equivalent per day (boe/d), driven by accelerated drilling activity, strong well performance, and improvements in the region's natural gas and crude oil infrastructure.

For instance, major oil facility start-ups in the fourth-quarter, including the Wattenberg oil trunk line, Tampa pipeline, and Plains Rail facility helped lower Noble's trucking costs and allowed it to access additional markets, while the start-up of a central processing facility within its Wells Ranch IDP area boosted daily oil sales by nearly 20,000 barrels per day. Roughly 90% of Noble's oil from the DJ Basin is now being exported or is tied to long-term contracts, which provides a great deal of security.

Similarly, Noble's gas takeaway capacity from the DJ Basin also improved significantly during the fourth quarter thanks to the start-up of DCP Midstream's (DCP) Wells Ranch compressor station and the O'Connor plant. And with DCP expected to start up a new facility -- the 200 Mmcf/d Lucerne 2 gas plant -- in the first half of 2015, gas takeaway capacity will increase even further.

Noble is also seeing additional benefits in the DJ Basin from its recent acreage swap with Anadarko Petroleum (APC), which consolidated the company's 50,000 acreage position in the play's northern and eastern sections. Noble expects the acreage exchange to result in additional efficiencies thanks to less sand work and more centralized field facilities.

Successful IDP implementation
But perhaps the most important recent development, in my view, is the impact of Noble's implementation of integrated development plans across its DJ Basin acreage. Not only are IDP areas already delivering meaningful reductions in development and operating costs, but they could also have a big impact on the value of its DJ Basin acreage.

Development costs in IDP areas are down by about $0.4-$0.8  million per well, thanks to pad drilling efficiencies and less water trucking, while operating costs have fallen by about $0.1-$0.3 million per well due to more efficient use of pumpers and the elimination of oil and water hauling. These savings could drive $2 billion in incremental value for the company's two currently sanctioned IDP areas.

Furthermore, well costs for a recently drilled and completed 10-well pad in its Well Ranch IDP area averaged roughly $4 million per well, down 5% in a period of just one month, while production was consistent with the company's type curve for the area. With roughly 90% of Noble's operated wells to be drilled in IDP areas this year, the potential future savings are massive.

The shift to IDPs across Noble's DJ Basin acreage and the resultant well cost savings could also boost the net present value of the company's DJ Basin wells by $1 million per well. Given that the company has thousands of remaining drilling locations across the basin, this could have a truly huge impact on Noble's net asset value, which could be a catalyst to push the stock higher.

The takeaway
As you can see, improving infrastructure and success with its IDP strategy could materially boost the value of Noble's DJ Basin assets. This year, the company expects to grow basin-wide production by at least 20% and will continue to test tighter spacing between wells, which could further reduce costs and improve returns.

With similarly encouraging results from its Marcellus operations, investors can expect Noble's onshore U.S. assets to continue providing a strong and stable production base, while its offshore operations in the eastern Mediterranean, Gulf of Mexico, and West Africa offer plenty of additional upside.