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Noble Energy announces 2Q18 results

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World Pipelines,

David L. Stover, Noble Energy’s Chairman, President and CEO, commented, “Noble Energy is executing well against our multi-year objectives and we’ve delivered a number of key accomplishments within the first half of the year. We achieved production records, enhanced our exploration portfolio and advanced our onshore and offshore development programmes, including key infrastructure additions and takeaway agreements. We have also returned significant cash to shareholders through our ongoing share repurchase programme and dividend increase, while reducing debt."

"Given industry constraints in the Permian, we plan to reallocate some near-term investment to our other US onshore basins. Our diversified portfolio, with many high-return investment opportunities, provides a distinct competitive advantage and allows us to rapidly adjust in dynamic environments to enhance returns and cash flow growth.”

Highlights include:

  • Delivered sales volumes of 346 000 boe/d, including quarterly records for both US onshore oil production and gross natural gas sales from Israel.
    • Increased US onshore oil production to 105 000 bpd, up 22% compared to 2Q17, with growth driven by the Delaware and DJ Basins.
    • Sold on average more than 1 billion ft3/d, gross, primarily from Tamar, offshore Israel, to domestic and export customers.
  • Installed two additional central gathering facilities in the Delaware Basin and initial gathering infrastructure for the Mustang development area in the DJ Basin.
  • Secured long-term Permian oil takeaway to the Gulf Coast, with access to export markets.
  • Executed Heads of Agreement establishing the framework for development of natural gas from the Alen field, offshore Equatorial Guinea.
  • Completed the divestment of the Gulf of Mexico business and sold 7.5 million units of CNX Midstream Partners.
  • Progressed the share buyback program, repurchasing 1.8 million outstanding Noble Energy shares, and reduced Noble Energy debt by US$379 million.

2Q18 results

The company reported a second quarter net loss attributable to Noble Energy of US$23 million, or US$0.05 per diluted share. Excluding the impact of items not typically considered by analysts in formulating estimates, the company generated adjusted net income and adjusted net income per share attributable to Noble Energy for the quarter of US$81 million, or US$0.17 per diluted share. The adjustment items were primarily the company’s mark to market on unrealised commodity derivative positions and gains on divestitures. Adjusted EBITDAX was US$698 million.

Total company sales volumes for 2Q18 were 346 000 boe/d, in the upper half of the company’s guidance range. Compared to 2Q17, sales volumes increased by approximately 11% due to higher volumes from each of the company's US onshore assets. US production comprised approximately 71% of total volumes in 2Q18, with Israel representing 11%, and West Africa 18%. Liquids comprised 56% of total sales volumes for 2Q18.

The company’s average reported US onshore oil price for 2Q18 was US$64.62/bbl. Noble Energy's crude oil sales from West Africa, which are linked to Brent pricing, averaged US$72.79/bbl. The company's US onshore NGLs were sold at both Conway and Mt. Belvieu, averaging US$24.39/bbl for the period. Natural gas prices in the US onshore business were US$2.29/thousand ft3, reflecting wider differentials in both the Delaware and DJ Basins. These prices do not include the impact of the Company’s commodity hedges. Israel natural gas prices averaged US$5.46/thousand ft3.

Unit operating expenses for 2Q18, including lease operating expenses (LOE), production and ad valorem taxes, gathering and transportation expenses, other royalty expense and marketing costs were consistent with expectations totalling US$9.48/boe.

Income from equity method investees for the quarter totalled US$49 million, with nearly 75% coming from the company’s operations in West Africa (methanol and LPG facilities) and over 20% related to the company’s ownership interest in CNX Midstream Partners LP.

The results for Noble Midstream Partners LP (NBLX) are consolidated into Noble Energy’s financial statements. Midstream services revenue of US$15 million for the quarter was primarily composed of NBLX's gathering revenue from unaffiliated third parties. The public’s 55% ownership of 2Q net income attributable to NBLX, US$17 million, has been excluded from Noble Energy’s results.

2Q18 capital investments attributable to Noble Energy totalled US$866 million and included certain scope changes for onshore facility projects as well as inflation in the US onshore environment. Approximately 65% was allocated to US upstream operations and 9% was directed towards US onshore midstream assets. Approximately 25% of the total was spent in Israel on development of the Leviathan natural gas project. Consolidated capital included an additional US$78 million in expenditures funded by NBLX.

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