Noble Energy Announces Fourth Quarter and Full-Year 2017 Results

HOUSTON , Feb. 20, 2018 (GLOBE NEWSWIRE) -- Noble Energy, Inc. (NYSE:NBL) ("Noble Energy" or the "Company") today announced fourth quarter and full-year 2017 financial and operating results.  Highlights include:

  • Strengthened the balance sheet through non-core asset divestitures and retired approximately $570 million of Noble Energy debt in the fourth quarter.
  • Delivered record quarterly U.S. onshore oil volumes and growth of over 40 percent(1) from first quarter to fourth quarter 2017.
  • Increased fourth quarter 2017 total company liquids composition to 56 percent compared to 46 percent in the fourth quarter 2016. U.S. onshore liquids grew to 67 percent of total U.S. onshore production.
  • Grew fourth quarter combined Texas volumes to 130 MBoe/d, and increased oil as a percentage of DJ Basin volumes to a record 55 percent.
  • Commenced operation at the Company's second Central Gathering Facility in the Delaware Basin .
  • Reduced unit operating expenses eight percent from the third quarter 2017 to $8.10 per BOE in the fourth quarter.
  • Proved reserves added replaced approximately 625 percent of 2017 production.

David L. Stover , Noble Energy's Chairman, President and CEO, commented, "For Noble Energy, 2017 was a transformative year as we repositioned our portfolio and executed on our strategy to drive capital efficiency in our high-margin, high-return basins.  We significantly advanced the development of our U.S. onshore assets as we reduced drilling costs and enhanced well productivity, while materially increasing the scale of our Texas operations. In addition, the value of our midstream business expanded through the build-out of multiple facilities to support the Company's future upstream production plans.  Our world-class Leviathan project was one of the largest offshore projects sanctioned in 2017, and we commenced project execution, taking advantage of a low point in the cycle for offshore costs.  All of this was accomplished with record safety performance across the Company.  The results delivered in 2017 provide significant momentum as we enter 2018 and deliver growing value for shareholders."

Fourth Quarter and Full-Year 2017 Results

Fourth quarter net income attributable to Noble Energy totaled $494 million , or $1.01 per diluted share.  The Company reported adjusted net income(2) and adjusted net income per share(2) attributable to Noble Energy for the quarter of $156 million , or $0.32 per diluted share, which excludes the impact of certain items typically not considered by analysts in formulating estimates.  Adjusted EBITDAX(2) was $789 million .

During the fourth quarter, the Company invested $579 million in its upstream operations and funded $76 million for onshore midstream assets.  Approximately 80 percent was deployed to our U.S. onshore plays and 17 percent was spent in Israel primarily for Leviathan development.

Total Company sales volumes for the fourth quarter 2017 were 380 thousand barrels of oil equivalent per day (MBoe/d), an increase of 25 MBoe/d from the third quarter 2017 and up nearly 50 MBoe/d(1)from the fourth quarter of last year.  Volumes for the fourth quarter of 2017 were impacted by approximately 7 MBoe/d as a result of winter storms and third-party facility impacts in the Company's Texas operations. U.S. onshore volumes were up approximately 40 percent(1) from the fourth quarter of 2016 while combined sales volumes from the Gulf of Mexico and West Africa were down approximately 20 percent due to natural field decline.  In Israel , net volumes were slightly lower than the fourth quarter of last year, driven by the impact of planned maintenance work in October 2017 .

Unit operating expenses for the fourth quarter 2017 totaled $8.10 per BOE, including lease operating expenses (LOE), production taxes, gathering and transportation expenses and marketing costs.  LOE decreased by three percent from third quarter 2017 to $4.49 per BOE.  Production tax expense for the period totaled 1.7 percent of oil, gas, and NGL revenues and benefited from finalizing prior years' property tax returns.  Depreciation, depletion and amortization was reduced to $14.28 per BOE, down 11 percent from the fourth quarter of last year primarily as a result of increased reserve bookings from our enhanced onshore well performance.

Equity method and other income for the quarter of $59 million was greater than expected primarily due to the strength of liquids prices at the methanol and LPG plants in Equatorial Guinea .

Adjustments to net income attributable to Noble Energy for the quarter include the removal of the gain on the sale of mineral interests, unrealized mark to market loss on commodity hedges, and the net impact from the recently enacted Tax Cuts and Jobs Act, among other items.  There is no significant near-term cash impact to Noble Energy resulting from the new tax law.

Full-year 2017 net loss attributable to Noble Energy totaled $1,118 million , or $2.38 per diluted share.  The Company reported adjusted net income(2) and adjusted net income per share(2) attributable to Noble Energy for the year of $147 million , or $0.31 per diluted share.  Adjusted EBITDAX(2) was $2,648 million for full-year 2017. 

The Company achieved full year reported sales volumes of 381 MBoe/d, an increase of seven percent(1) from 2016.  Organic upstream capital expenditures and midstream investments funded by the Company totaled $2,556 million for the year.

Strengthening the Balance Sheet

In November 2017 , the Company closed the sale of non-core mineral and royalty interests, including approximately 4 MBoe/d of net production for $340 million . In December 2017 , the Company closed the sale of approximately 30,200 net acres of its DJ Basin position in Weld County, Colorado , which included approximately 3 MBoe/d.  Noble Energy received $568 million from the initial close of the DJ Basin sale and anticipates the remaining funds of approximately $40 million to be received in a final closing by mid-2018.

During the fourth quarter, the Company paid off its term loan balance of $550 million and certain legacy Rosetta Resources notes of approximately $20 million , bringing full-year 2017 Noble Energy debt retirement to approximately $1.2 billion , inclusive of Clayton Williams Energy debt retired at the time of acquisition. The Company ended 2017 with $4.5 billion in total financial liquidity, comprised of cash and Noble Energy's available credit facility borrowing capacity.

Significant U.S. Onshore Growth

Total sales volumes across the Company's U.S. onshore assets averaged 249 MBoe/d in the fourth quarter 2017, up approximately 40 percent(1) from the fourth quarter of 2016.  U.S. onshore oil volumes totaled a record 104 MBbl/d, up over 40 percent(1) from the first quarter 2017.  Fourth quarter 2017 volumes reflect record quarterly volumes in the Company's Eagle Ford and Delaware Basin assets.  Texas volumes were reduced approximately 7 MBoe/d in the fourth quarter due to winter storms in December and third-party facility impacts.

The DJ Basin averaged 115 MBoe/d, an increase of three percent from the fourth quarter of last year driven by strong well performance in the Company's Wells Ranch and East Pony areas.  Oil volumes in the DJ Basin totaled 63 MBbl/d, or 55 percent of total basin production, up five percentage points from the fourth quarter of last year.

Noble Energy's Texas volumes increased by more than 75 MBoe/d in the fourth quarter as compared to the fourth quarter 2016.  Production from the Eagle Ford doubled from the fourth quarter 2016 to an average of 92 MBoe/d through development of the Lower Eagle Ford in South Gates Ranch .  Delaware Basin production of 38 MBoe/d was nearly four times that of the fourth quarter 2016 as the Company continued to accelerate the pace of development and delivered strong well performance.  The second Delaware Basin central gathering facility, operated by Noble Midstream Partners , started up at the beginning of December 2017 .

During the fourth quarter, the Company averaged eight operated drilling rigs (two DJ, five Delaware and one Eagle Ford ) and four completion crews (two DJ and two Delaware ).  Fourth quarter operated wells brought online included 22 in the DJ Basin , 10 in the Eagle Ford and 21 in the Delaware .

Strong Performance in Israel

Net sales volumes totaled 262 million cubic feet of natural gas equivalent per day (MMcfe/d) during the fourth quarter of 2017.  Gross production from the Company's assets in Israel averaged 911 MMcfe/d.  The Company completed planned maintenance at Tamar ahead of schedule in the early part of the fourth quarter, contributing to 98 percent uptime during the quarter.

Currently, development of the Leviathan project is approximately 40 percent complete.  Construction of the production platform is underway, preparations to mobilize the drilling rig commenced and the project remains on budget and schedule with first gas sales anticipated by the end of 2019.

Offshore Assets

Sales volumes for West Africa were 64 MBoe/d (30 percent oil) which were equal to produced volumes.  Quarterly sales volumes in the Gulf of Mexico averaged 23 MBoe/d, with 78 percent oil contribution, reflecting continued strong field performance and facility uptime. 

Additional details for the fourth quarter and year-end results can be found in the quarterly supplement on the Company's website,

(1)   Pro forma for asset divestments.
(2)   A Non-GAAP measure, please see the respective earnings release schedules included herein for reconciliations.

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