HOUSTON, May 01, 2018 (GLOBE NEWSWIRE) — Noble Energy, Inc. (NYSE:NBL) (“Noble Energy” or the “Company”) today announced first quarter 2018 financial and operating results. Highlights include:
- Delivered quarterly sales volumes of 361 MBoe/d(1) up 18 percent(2) from first quarter 2017 on organic capital expenditures of $781 million.
- Increased U.S. onshore oil production over 30 percent(2) compared to the first quarter of 2017 driven by Delaware Basin growth.
- Completed the Company’s third central gathering facility in the Delaware Basin.
- Established a record for first quarter gross sales volumes in Israel of 959 MMcfe/d.
- Secured contracts totaling up to an additional 740 MMcf/d of natural gas sales to customers in Egypt and Israel from Tamar and Leviathan.
- Closed the divestments of the General Partner of CONE Gathering and a 7.5 percent working interest in the Tamar field, and announced the sale of the Gulf of Mexico business.
- Reduced Noble Energy debt by $230 million and increased total financial liquidity to more than $5 billion at the end of the first quarter.
- Announced $750 million share repurchase program and repurchased approximately $67.5 million of Noble Energy stock during late February and March.
David L. Stover, Noble Energy’s Chairman, President and CEO, commented, “Noble Energy is off to a fast start in 2018, building on our successes in 2017. In the first quarter, we accomplished numerous strategic objectives. Our portfolio transformation and superior execution capabilities have positioned us to continue driving improved capital efficiency and corporate returns. Our core positions in the U.S. onshore business provide a great foundation for high-return, high-margin growth. Offshore, we are maximizing cash flow from our assets, while progressing our world-class Leviathan development. Growing our cash flows enables us to accelerate direct return to shareholders through our buyback program and our recent dividend increase.”
Accounting Standard Implementation
Beginning January 1, 2018, the Company modified the presentation of revenue and certain gathering and transportation expenses based on the timing of transfer of ownership of produced commodities in accordance with the implementation of FASB Accounting Standards Codification Standard 606 (“ASC 606”). In addition, the new standard impacted the presentation of natural gas and natural gas liquids (NGL) volumes sold under certain contracts, primarily in the DJ Basin. There was no impact on the Company’s operating cash flows or net income.
First Quarter 2018 Results
First quarter net income attributable to Noble Energy totaled $554 million, or $1.14 per diluted share. The Company reported adjusted net income(3) and adjusted net income per share(3) attributable to Noble Energy for the quarter of $172 million, or $0.35 per diluted share, which excludes the impact of certain items typically not considered by analysts in formulating estimates. Adjusted EBITDAX(3) was $797 million.
During the first quarter, the Company invested $671 million in its upstream operations, with approximately 75 percent deployed to the Company’s U.S. onshore plays and 22 percent spent in Israel primarily for Leviathan development. The Company also funded $110 million for U.S. onshore midstream assets. Consolidated capital included $139 million organic expenditures and $206 million for a pipeline acquisition, related to Noble Midstream Partners LP (“Noble Midstream”).
Prior to the implementation of ASC 606, total company sales volumes for the first quarter 2018 were 361 thousand barrels of oil equivalent per day(1) (MBoe/d). Compared to the first quarter of 2017, sales volume increased by approximately 18 percent(2) driven by growth from the Company’s U.S. onshore assets. Reflecting the implementation of ASC 606, first quarter 2018 sales volumes totaled 370 MBoe/d.
Unit operating expenses for the first quarter 2018 totaled $10.06 per barrel of oil equivalent (BOE)(1), including lease operating expenses (LOE), production and ad valorem taxes, gathering and transportation expenses, other royalty expense and marketing costs. In the U.S. onshore, slightly higher LOE was more than offset by lower gathering and transportation expenses.
Income from equity method investees for the quarter of $47 million was greater than expected, primarily due to the strength of liquids prices at the methanol and LPG plants in Equatorial Guinea. Midstream services revenue totaled $13 million for the quarter, primarily comprised of consolidated Noble Midstream third-party gathering revenue.
Further Strengthened the Balance Sheet
As part of the Company’s long-term strategic plan and multi-year outlook, Noble Energy has prioritized the direct return of capital to shareholders. During the first quarter, Noble Energy repurchased nine percent of its announced $750 million share repurchase program. On April 23, 2018, Noble Energy increased its quarterly dividend 10 percent to $0.11 per share.
During the first quarter, the Company completed an amendment to its $4 billion revolving credit facility which extended the maturity date by two years to March 2023. Noble Midstream also completed a credit facility amendment, extending the maturity date of its revolver to March 2023 and increasing the facility size to $800 million.
The Company paid down $230 million of Noble Energy debt during the first quarter. Total financial liquidity increased to more than $5 billion, comprised of cash and Noble Energy’s undrawn credit facility borrowing capacity. Subsequent to quarter-end, the Company issued an early call for $379 million of legacy Rosetta Resources Inc. notes, set to mature in May 2021 with a settlement date of May 1, 2018. Noble Midstream’s outstanding debt at the end of the first quarter increased by $350 million, primarily as a result of the acquisition of the Saddle Butte pipeline.
Noble Energy’s Investment Grade credit rating was reaffirmed during the first quarter. In addition, S&P revised its outlook for Noble Energy to stable from negative, while Fitch revised its outlook to positive from stable.
Solid U.S. Onshore Operations
Total sales volumes across the Company’s U.S. onshore assets averaged 237 MBoe/d(1) in the first quarter 2018, up approximately 40 percent(2) from the first quarter 2017. U.S. onshore oil volumes totaled 103 thousand barrels per day (MBbl/d), up over 30 percent(2) from the first quarter of 2017, with the increase primarily driven by the Company’s Delaware Basin assets. Reflecting the implementation of ASC 606, first quarter 2018 U.S. onshore sales volumes totaled 246 MBoe/d.
The DJ Basin averaged 111 MBoe/d(1), up seven percent(2) from the first quarter of last year, with the oil mix increased to a record of 56 percent(1). Reflecting the implementation of ASC 606, first quarter 2018 DJ Basin sales volumes totaled 120 MBoe/d, with an oil mix of 52 percent. DJ Basin sales volumes were driven by continued strong well performance in the Company’s Wells Ranch and East Pony areas. The Company brought online 31 wells within the first quarter, consisting of 15 wells in Wells Ranch and 16 wells in East Pony. Late in the quarter, completion activity moved to the Mustang IDP area.
Sales volumes from the Company’s Delaware Basin assets totaled 45 MBoe/d, with an oil mix of 69 percent. Compared to the first quarter of last year, sales volumes increased by over 85 percent(2). The Company brought online 13 wells in the first quarter, all of which were located on multi-well pads. The majority were landed within the Wolfcamp A Upper and Lower zones as well as one well in the Third Bone Spring and one well in the Wolfcamp C. Within the quarter, the Company expanded its produced water management program, with nearly 10 percent of water used in completions being recycled produced water.
In late March, the Company completed its third central gathering facility (“CGF”) in the Delaware Basin operated by Noble Midstream. The facility represents the Company’s first CGF in the southern portion of the Company’s acreage. The Company commenced operations from its fourth CGF in late April, and expects one additional CGF online by the end of the second quarter.
Sales volumes from the Eagle Ford totaled 81 MBoe/d, and were impacted approximately 3 MBoe/d in the first quarter due to facility downtime impacts. Activity in the Eagle Ford focused on completions for wells expected online in the second quarter of 2018.
During the first quarter, Noble Energy averaged nine operated drilling rigs (one DJ, six Delaware and two Eagle Ford). The Company improved drilled footage per day in the first quarter compared to the 2017 average by three percent, 10 percent and seven percent in the DJ, Delaware and Eagle Ford, respectively.
Significant Milestones in the Eastern Mediterranean
March 2018 marked the five-year anniversary of first production from Tamar, offshore Israel. During the quarter, the field reached cumulative production of 1.5 Tcf since start-up. A record was established for first quarter gross sales volumes of 959 million cubic feet of natural gas equivalent per day (MMcfe/d). Net sales volumes totaled 263 MMcfe/d during the first quarter of 2018. On March 14, 2018, the Company closed the divestment of a 7.5 percent working interest in the Tamar field. Also during the first quarter, the Company exceeded more than three million man hours and one year of performance without a recordable safety incident.
Currently, development of the Leviathan project is approximately 45 percent complete and construction of the production platform continues to progress. A drilling rig arrived in March and commenced operations of the Leviathan-3 well in early April. The pipe lay vessel is on-site, installing infield flowlines and gas gathering pipelines which will connect to the platform. The project remains on budget and on schedule with first gas sales anticipated by the end of 2019.
Since year-end 2017, the Company has executed several natural gas contracts with customers in Egypt and Israel bringing total volumes under contract for Leviathan to over 900 MMcf/d. Included in this amount is a new agreement with an existing customer to provide approximately 40 MMcf/d beginning in the second quarter 2018 from Tamar, which will then transfer to Leviathan upon field start-up.
Continued Reliable Offshore Performance
Sales volumes for West Africa in the first quarter 2018 were 56 MBoe/d (30 percent oil), which were less than produced volumes by 2 MBoe/d. The difference in sales and produced volumes was due to the lifting schedule for the Aseng and Alen fields. Also during the first quarter, the Company achieved more than two years without a recordable safety incident at Aseng and almost four years without a recordable safety incident at Alen.
Quarterly sales volumes in the Gulf of Mexico averaged 24 MBoe/d. The Company closed the sale of the U.S. Gulf of Mexico business on April 12, 2018.
Updated Guidance for ASC 606 and Timing of Portfolio Transactions
The Company’s guidance has been updated to reflect the adoption of ASC 606 and the timing of the closing of the Gulf of Mexico transaction. The close of the Gulf of Mexico transaction, which occurred one month earlier than anticipated, impacted prior second quarter expectations by an estimated 7 MBoe/d and full year expectations by nearly 2 MBoe/d. The implementation of ASC 606 resulted in an uplift to second quarter and full year volumes of approximately 9 MBoe/d compared to prior estimates. Accounting for only these specific items, full year 2018 sales volumes have been increased to range between 350 and 360 MBoe/d.
The Company’s unit operating expense guidance has been updated to reflect the increase in sales volumes. Compared to the Company’s previously issued guidance, LOE per BOE and gathering and transportation expenses per BOE have each been reduced by ten cents.
Sales volumes for the second quarter of 2018 are expected to range between 340 and 350 MBoe/d (post ASC 606). The divestitures of the Gulf of Mexico and the 7.5 percent Tamar interest in Israel account for nearly 30 MBoe/d reduction (20 MBoe/d Gulf of Mexico and 10 MBoe/d Israel) from the first quarter 2018 to the second quarter. Gulf of Mexico sales volumes are included through the April 12, 2018 closing date. West Africa sales volumes are expected to be slightly higher than the first quarter as a result of lifting schedules. U.S. onshore oil volumes are expected to be higher than the first quarter, driven by the Delaware Basin.
The Company’s full year capital expenditure range of $2.7 to $2.9 billion remains unchanged. For the second quarter, Noble Energy expects organic capital expenditures between $750 million and $850 million, with the majority to be spent in the DJ and Delaware basins and to progress Leviathan development. Second half of 2018 capital expenditures are expected to be lower than the first half reflecting front-end loaded infrastructure spend in the Mustang IDP and the Delaware Basin.
Additional details for first quarter results and guidance can be found in the quarterly supplement on the Company’s website, www.nblenergy.com.
(1) Reflects historical presentation of sales volume, pre-implementation of ASC 606 accounting standard.
(2) Pro forma for asset acquisitions and divestitures.
(3) A Non-GAAP measure, please see the respective earnings release schedules included herein for reconciliations.
Webcast and Conference Call Information
Noble Energy, Inc. will host a live audio webcast and conference call at 8:00 a.m. Central Time on May 1, 2018. The webcast link is accessible on the ‘Investors’ page at www.nblenergy.com. A replay will be available on the website. Conference call numbers for participation during the question and answer session are:
Toll Free Dial in: 888-882-4478
International Dial in: 323-794-2149
Conference ID: 4898384
Noble Energy (NYSE:NBL) is an independent oil and natural gas exploration and production company with a diversified high-quality portfolio of both U.S. unconventional and global offshore conventional assets. Founded more than 85 years ago, the Company is committed to safely and responsibly delivering our purpose: Energizing the World, Bettering People’s Lives®. For more information, visit www.nblenergy.com.
This news release contains certain “forward-looking statements” within the meaning of federal securities laws. Words such as “anticipates”, “believes”, “expects”, “intends”, “will”, “should”, “may”, and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect Noble Energy’s current views about future events. Such forward-looking statements may include, but are not limited to, future financial and operating results, and other statements that are not historical facts, including estimates of oil and natural gas reserves and resources, estimates of future production, assumptions regarding future oil and natural gas pricing, planned drilling activity, future results of operations, projected cash flow and liquidity, business strategy and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, without limitation, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other actions, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy’s businesses that are discussed in Noble Energy’s most recent annual report on Form 10-K, and in other Noble Energy reports on file with the Securities and Exchange Commission (the “SEC”). These reports are also available from the sources described above. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Energy does not assume any obligation to update any forward-looking statements should circumstances or management’s estimates or opinions change.
This news release also contains certain historical non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating Noble Energy’s overall financial performance. These non-GAAP measures are broadly used to value and compare companies in the crude oil and natural gas industry. Please see Noble Energy’s respective earnings release for reconciliations of the differences between any historical non-GAAP measures used in this news release and the most directly comparable GAAP financial measures.
Investor Contacts Brad Whitmarsh (281) 943-1670 Megan Dolezal (281) 943-1861 Lauren Brown (281) 872-3208 Media Contacts Reba Reid (713) 412-8441 Paula Beasley (281) 876-6133