Noble Energy Announces Second Quarter 2013 Results
Noble Energy, Inc. (NYSE:NBL) announced today second quarter 2013 net income of $377 million, or $1.04 per diluted share, and income from continuing operations(1) of $358 million, or $0.99 per diluted share. Excluding the impact of unrealized commodity derivative gains and certain other items, second quarter 2013 adjusted income from continuing operations(2) was $249 million, or $0.69 per diluted share. For the second quarter of 2012, the Company had income from continuing operations(1) of $275 million, or $0.74 per diluted share, and adjusted income from continuing operations(2) of $137 million, or $0.36 per diluted share.
Discretionary cash flow from continuing operations(2) for the second quarter of 2013 was $765 million compared to $640 million for the same quarter of 2012. Net cash provided by operating activities was $539 million and capital expenditures were $1.1 billion during the second quarter of 2013.
Key highlights for the second quarter of 2013 include:
• Achieved record sales volumes of 260 thousand barrels of oil equivalent per day (MBoe/d)
• Attained record DJ Basin horizontal production averaging 50 MBoe/d
• Reached record exit rate of 150 million cubic feet equivalent per day (MMcfe/d) in the Marcellus Shale
• Confirmed primary resource target with the successful Gunflint appraisal well in the Gulf of Mexico
• Announced a natural gas discovery at the Karish prospect offshore Israel
• Reached full operation at Tamar natural gas field and averaged over 99 percent reliability since initial production in April
• Initiated first production from the Alen field offshore Equatorial Guinea
Charles D. Davidson, Noble Energy’s Chairman and CEO, commented, “Our second quarter results position us well to meet our objectives for 2013 and continue to lay a foundation for long-term, sustainable growth. The commencement of production at Alen is a milestone accomplishment and marks our fourth major project brought online in the last two years, within budget and ahead of schedule. For the remainder of the year, we look forward to continuing to establish new production records, with significant contributions from all of our core areas of operation. In addition, we are participating in a number of impactful exploration and appraisal wells, including our first prospects in Nevada and offshore Nicaragua, both of which have the potential to be new core areas for Noble Energy.”
VOLUMES AND PRICES
Second quarter 2013 sales volumes from continuing operations averaged a record 260 MBoe/d, an increase of 24 percent compared to the second quarter of 2012, after adjusting for assets divested in 2012. Sales volumes exceeded production volumes in the quarter by approximately 2 MBoe/d due to the timing of liftings. The sales volume split for the quarter was 44 percent liquids, 30 percent international natural gas, and 26 percent U.S. natural gas.
Sales volumes from international assets were a record 120 MBoe/d for the second quarter of 2013, an increase of 33 percent compared to the second quarter of 2012, excluding volumes from discontinued operations in the North Sea. The increase was primarily due to the commencement of sales at the Tamar natural gas field offshore Israel.
U.S. volumes totaled 140 MBoe/d for the second quarter of 2013, an increase of 14 percent compared to the same quarter last year, excluding volumes from divested assets. Growth from the horizontal plays in the DJ Basin and Marcellus Shale were the primary contributors to the increase. Production in the second quarter of 2013 was impacted by third-party facility downtime in the deepwater Gulf of Mexico, as well as late winter storms in Colorado.
Global crude oil and condensate prices averaged $96.84 per barrel for the second quarter of 2013, compared to $99.67 per barrel in the same quarter of last year. Natural gas realizations averaged $4.04 per thousand cubic feet (Mcf) in the U.S., up 92 percent primarily due to improved natural gas fundamentals, and averaged $4.92 per Mcf in Israel. Natural gas liquid pricing in the U.S. averaged $30.05 per barrel, which represented 32 percent of the average West Texas Intermediate crude oil price for the quarter.
Total production costs per barrel of oil equivalent (Boe), including lease operating expense (LOE), production and ad valorem taxes, and transportation were $8.88 per Boe, up eight percent from the second quarter of 2012. LOE and depreciation, depletion, and amortization (DD&A) per Boe were $5.92 and $15.55, respectively. LOE unit costs were up for the quarter and reflect temporary maintenance costs in the Gulf of Mexico and increased operations in Israel. Significant seismic activities in the Falklands and Cyprus, as well as dry hole costs associated with the deep target at Gunflint were included in exploration expense. The adjusted effective tax rate for the second quarter of 2013 was 26 percent with 20 percent deferred.
In the DJ Basin, production averaged 90 MBoe/d for the second quarter. The horizontal program accounted for a record 50 MBoe/d of production, up from 45 MBoe/d last quarter. Liquid volumes accounted for 62 percent of total sales. The Company is operating nine rigs in the greater Wattenberg area and two in Northern Colorado. During the quarter, 75 wells were drilled and 69 wells were completed. Six of the wells drilled during the quarter were extended-reach lateral wells. The extended-reach lateral program continues to deliver superior results and returns. Currently, 23 wells are on line with lateral lengths ranging from 6,500 to 10,000 feet.
In the Marcellus Shale, the Company is operating three horizontal rigs in the wet gas area and anticipates adding two additional horizontal rigs in the second half of the year. During the quarter, drilling operations in the Majorsville and Normantown areas resulted in 14 operated wells reaching total depth. The Company drilled its longest lateral to date with total in-zone pay length of more than 10,400 feet. In June, the 11-well WEB-4 pad was brought online at an initial gross production rate of over 50 MMcf/d plus 3 thousand barrels per day of liquids. CONSOL Energy, the Company’s joint venture partner, is operating two horizontal rigs in the dry gas area. Total joint venture production for the quarter averaged 112 MMcfe/d net.
In the Gulf of Mexico, a second appraisal well at Gunflint successfully encountered hydrocarbon pay within the primary reservoir targets. The development of the Gunflint project is expected to be a subsea tie-back and is targeted to be sanctioned by the end of 2013. Troubadour, a low-risk exploration prospect adjacent to the Big Bend discovery, is currently drilling with results expected in the third quarter. Following the farm-out of a portion of its interest in Troubadour, the Company is operating the prospect with a working interest of 60 percent.
In the Eastern Mediterranean, Tamar became fully operational in the second quarter and had uptime reliability of more than 99 percent. Gross production in Israel averaged 676 MMcfe/d, with Tamar contributing 636 MMcfe/d. Tamar reported a single-day production high of 784 MMcfe/d during the second quarter of 2013. Plans continue to progress for an expansion of the Ashdod onshore receiving terminal, which handles our gas production in Israel. The Company announced a natural gas discovery at the Karish prospect offshore Israel with an estimated resource range between 1.6 and 2.0 trillion cubic feet of natural gas (Tcf). Total discovered gross mean resources in the Levant Basin are now estimated to be approximately 38 Tcf. Appraisal drilling of the natural gas discovery in Cyprus was initiated during the second quarter and is projected for completion in the third quarter.
In West Africa, the Alen field commenced production late in the second quarter, significantly ahead of schedule and less than two and a half years from the time of sanction. Commissioning efforts are underway with full operations expected by the end of the third quarter. The Aseng field reached a milestone of 35 million barrels of oil produced and recently came off plateau as expected, currently producing approximately 50 thousand barrels of oil per day, gross.
The full year volume guidance range for 2013 remains unchanged at 270 to 282 MBoe/d. Third quarter 2013 volumes are expected to average 285 to 295 MBoe/d, with the midpoint representing an increase of 30 MBoe/d, or approximately 12 percent versus the second quarter of 2013. The increase is largely attributable to the ramp up of Alen, additional natural gas sales from Tamar and the continued acceleration of activity in the DJ Basin and the Marcellus Shale wet gas area.
All other annual guidance ranges remain unchanged.
(1) Noble Energy has divested the majority of its North Sea properties and has reclassified the results of its entire North Sea operations as discontinued operations for all accounting periods presented in this release.
(2) Non-GAAP measure, see attached Reconciliation Schedules
Source: Noble Energy
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