On Monday, Noble Energy (NBL), the Houston-based independent energy exploration and production company, announced that it will expand its presence in the deepwater Gulf of Mexico by acquiring a 50% interest in 17 deepwater exploration leases from BP (BP 0.97%). Let's take a closer look at how this might impact the company's future in the region, as well as its overall future.

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Noble to buy Gulf of Mexico leases from BP
Under the terms of the deal, Noble will participate with a 50% working interest in the Bright prospect, which is currently being drilled in water depths of 5,600 feet and could hold 90 to 350 million barrels of oil equivalent in total gross unrisked resources, according to Noble's estimates.

Besides the Bright prospect, Noble has also identified multiple follow-on exploration opportunities on the newly acquired leases. The company believes the leases present numerous opportunities for both near-term and long-term production growth and expects to announce results from its Katmai prospect during its second-quarter earnings calls and from the Bright prospect in the third or fourth quarter.

Though neither BP nor Noble revealed the deal's price tag, making it difficult to judge the transaction from a valuation perspective, the location of Noble's exploration leases and its strong track record of success in deepwater drilling in the Gulf of Mexico bode well for the company.

A big opportunity for Noble
The newly acquired leases are all located in the Atwater Valley protraction area, where BP bid $8 million for a tract of land located roughly 180 miles south of Biloxi, Mississippi, during a government auction in March. That tract was located roughly 10 to 15 miles northeast of the most expensive lease auctioned off -- one for which Freeport-McMoRan (FCX -0.88%) bid $68.8 million.

Freeport-McMoRan is also betting big on the Gulf of Mexico as the mining giant attempts to diversify its revenues away from copper and double its oil and gas production by 2020. Judging by the level of bidding activity and prices paid for Atwater Valley tracts, the industry clearly has high hopes for deepwater blocks in the area.

Noble is no stranger to drilling in the Gulf of Mexico. The company entered the Gulf several years ago and views it as a key driver of its production growth, along with its onshore US operations in Colorado's Denver-Julesburg (DJ) Basin and Pennsylvania's Marcellus shale and its Tamar and Leviathan gas fields offshore Israel.

In addition to a newly expanded portfolio of exploration opportunities, Noble also has a number of large producing fields in the Gulf of Mexico, as well as multiple ongoing development projects. Over the next four to five years, the company expects to double its production from the deepwater Gulf as it develops high-impact projects such as Gunflint, Big Bend, and Dantzler.

Firing on all cylinders
In addition to the long-term upside from its newly acquired Gulf of Mexico exploration leases, Noble is firing on all cylinders across the rest of its portfolio. The company's first-quarter oil and gas sales volumes jumped 20% year over year, fueled by strong performance in the DJ Basin and Marcellus, as well as higher volumes from Israel's Tamar field and West Africa.

Noble is also funding its capital expenditures largely through cash flow, with first-quarter operating cash flow of $929 million only slightly lower than capital expenditures of $950 million. Combined with its strong balance sheet and liquidity of $4.9 billion, the company has ample financial flexibility to ramp up its drilling activity or pursue additional acquisitions.

Investor takeaway
With a large, diversified, and growing portfolio of high-quality assets, Noble is positioned for peer-leading, double-digit production growth over the next several years. Though the company's exceptional growth prospects seem to be largely priced in -- shares currently trade at nearly 20x forward earnings -- Noble's active exploration program in the Gulf of Mexico and offshore West Africa offers meaningful long-term upside.