Noble Energy Announces Strong Outperformance With Third Quarter Results
Noble Energy, Inc. (NYSE:NBL) (“Noble Energy” or “the Company”) announced results for the third quarter of 2016, including a reported net loss attributable to Noble Energy of $144 million, or $0.33 per diluted share.
The adjusted net loss(1) attributable to Noble Energy for the quarter was $30 million, or $0.07 per diluted share, which excludes the impact of certain items typically not considered by analysts in formulating estimates. Adjusted EBITDAX(1) was $645 million.
“Once again, the strength of our high-quality asset base and operational execution was on display in the third quarter. This was demonstrated by our continued outstanding production performance and cost control. Other recent strategically significant highlights include the successful IPO of the Noble Midstream business, the separation of our Marcellus Joint Venture, and the signing of the first sizable export contract to support Leviathan development. Year to date, we have operated our business within organic cash flows while also monetizing nearly $1.5 billion in assets. Improving our balance sheet has positioned our business for activity acceleration and allowed us to pay down debt. We have already added an additional two rigs to our Texas assets in the fourth quarter and I would expect that we will further increase activity in the near future. Tremendous performance has ensured a bright future for Noble Energy.”
The Company sold quarterly volumes of 425 thousand barrels of oil equivalent per day (MBoe/d) during the third quarter of 2016.
Total sales volumes were higher by 12 percent compared to the third quarter of 2015, or 8 percent pro-forma for the Rosetta Resources Inc. merger (completed in late July 2015).
Production volumes for the third quarter were 427 MBoe/d, which differed from sales volumes due largely to the timing of liftings in West Africa.
Liquids comprised 43 percent of third quarter 2016 volumes, with 29 percent being crude oil and condensate and 14 percent natural gas liquids (NGLs). Natural gas accounted for the remaining 57 percent.
Total oil volumes of 123 thousand barrels per day were meaningfully above expectation and were primarily driven by outperformance in the DJ Basin, Gulf of Mexico, and West Africa business units.
U.S. onshore sales volumes for the quarter were 270 MBoe/d, up 5 percent compared to the third quarter of 2015 pro-forma. Global offshore sales volumes, including the Gulf of Mexico and West Africa, totaled 103 MBoe/d, an increase of 21 percent compared to the third quarter of 2015. This increase was primarily driven in the Gulf of Mexico by major project contributions from Big Bend, Dantzler and Gunflint, all of which came online in the last 12 months.
Sales volumes in Israel were 313 MMcfe/d, establishing a new quarterly record for the Company.
Nearly all cost items for the quarter were below the Company’s expectations. Lease operating expenses (LOE) were significantly lower at $3.37 per barrel of oil equivalent (BOE), a reduction of 14 percent compared to the third quarter of 2015 pro-forma. LOE per BOE benefited from strong third quarter sales volumes and lower than normal workover activity. Transportation and gathering expenses totaled $2.88 per BOE while depreciation, depletion and amortization expenses for the quarter were $15.87 per BOE. General and Administrative costs for the quarter were $95 million, down $15 million from the third quarter of last year pro-forma.
Exploration expense for the quarter was $125 million and included $81 million of leasehold impairment due to the write-off of certain leases in the Gulf of Mexico and the Falkland Islands. These items were adjustments to the Company’s net loss for the third quarter of 2016. Additional adjustments to net loss included unrealized commodity derivative losses, primarily related to existing crude oil hedging positions, and the tax effect of the gain to be recorded on the sell-down of Tamar working-interest.
The Company’s overall reported income tax rate for the quarter was 49 percent.
Following removal of the adjustment items to the Company’s net loss, the adjusted effective tax rate was 72 percent, reflecting current tax expense of $37 million and a deferred benefit of $113 million.
Third quarter capital expenditures were $297 million, substantially below expectation and reflecting continued operational efficiencies across the business. Nearly 85 percent of the Company’s capital program was allocated to U.S. onshore development activities. Included in Noble Energy’s capital was $8 million related to capital expenditures for Noble Midstream Partners LP (NBLX). Following the successful IPO of NBLX, Noble Energy holds approximately 55 percent of NBLX’s limited partnership units. Financial results for NBLX are fully consolidated into Noble Energy’s financial statements, with adjustments for the non-controlling interest (reflecting public ownership of approximately 45%) made on the income statement and balance sheet.
Source / More on: Noble Energy, Inc.
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