Noble Energy Announces Third Quarter 2017 Results, Strong U.S. Onshore Delivery Continues

  • Quarterly sales volumes averaged 355 MBoe/d, up 10 MBoe/d from the midpoint of the Company's original guidance range, on capital expenditures of $633 million which were toward the lower end of expectations.
  • Total oil volumes of 129 MBbl/d were 5 percent higher than original 3Q expectations.
  • U.S. onshore oil volumes grew to a quarterly record of 93 MBbl/d, up approximately 25 percent from the third quarter of last year.  Onshore operating cash flow per BOE is up approximately 50 percent over the same period.
  • DJ Basin well performance increased Wells Ranch and East Pony net volumes by approximately 10 percent from the second quarter of 2017 to 76 MBoe/d. Oil as a percentage of total basin volumes grew to a record 54 percent.
  • Commenced operation at the Company's initial Central Gathering Facility in the Delaware Basin , Billy Miner operated by Noble Midstream Partners , with 10 wells producing through the facility as of the end of the third quarter.
  • Increased lateral footage drilled per rig per day in the Delaware Basin by more than 30 percent from the first of the year, setting record drill times for long, medium and short length laterals.
  • Established a quarterly record for gross sales volumes in Israel at 997 MMcfe/d (285 MMcfe/d net), while increasing Tamar field gross recoverable resources by 10 percent to 11 Tcfe.
  • Reduced future annual cash interest cost approximately $35 million by retiring $1 billion 8.25 percent bonds due 2019, utilizing proceeds from new Senior Notes issued.

HOUSTON , Oct. 30, 2017 (GLOBE NEWSWIRE) -- Noble Energy, Inc. (NYSE:NBL) ("Noble Energy" or "the Company") today announced results for the third quarter of 2017, including a net loss attributable to Noble Energy of $136 million , or $0.28 per diluted share.  The Company reported an adjusted loss(1) and adjusted loss per share(1) attributable to Noble Energy for the quarter of $10 million , or $0.02 per diluted share, which excludes the impact of certain items typically not considered by analysts in formulating estimates.  Adjusted EBITDAX(1) was $601 million for the third quarter.

David L. Stover , Noble Energy's Chairman, President and CEO, commented, "Our strong results for the third quarter continue to reflect the Company's high-quality assets and differentiated execution, with particularly strong performance from our U.S. onshore business.  The significant value of our recent strategic portfolio repositioning is being realized as onshore cash flows and volumes grow at a rapid pace as we move towards the end of 2017.  This is also reflective of industry-leading well performance in each basin and the benefits of our integrated midstream strategy through Noble Midstream Partners .  With our focus on significantly improving per unit cash margins and enhancing our overall corporate returns, nearly 100 percent of our forward capital is being allocated to our three U.S. onshore plays and the Eastern Mediterranean."

Total Company sales volumes for the third quarter of 2017 were 355 thousand barrels of oil equivalent per day (MBoe/d), up 10 MBoe/d from the midpoint of original guidance.  Approximately 60 percent of the increase from original guidance is related to oil.  Pro-forma for the Marcellus divestment in June 2017 , third quarter sales volumes were up four percent from the second quarter of 2017 and seven percent from the third quarter of last year.  Crude oil and condensate sales volumes were 129 thousand barrels per day (MBbl/d), natural gas liquids (NGLs) totaled 63 MBbl/d and natural gas contributed 978 million cubic feet per day.  Heavy localized storms resulted in flash floods and the temporary shut-in of the vast majority of Eagle Ford production in late September and early October, reducing the Company's average third quarter volumes by approximately 5 MBoe/d.

Total U.S. onshore sales volumes averaged 219 MBoe/d, up nearly eight percent from the second quarter of 2017 and 23 percent from the third quarter of 2016, pro-forma.  Offshore sales volumes were 136 MBoe/d with Israel volumes setting a quarterly record and continued strong production performance in the Gulf of Mexico and West Africa .

U.S. onshore crude oil differentials were less than $2 per barrel on average below WTI, NGL pricing strengthened to represent 47 percent of WTI, and U.S. onshore natural gas pricing averaged slightly below Henry Hub .  The Company's Israel gas price averaged $5.36 per thousand cubic feet in the third quarter.

Operating expenses for the third quarter, including lease operating expenses (LOE), production taxes, and gathering, transportation and processing (GTP) expenses, were below expectations at $8.58 per barrel of oil equivalent (BOE).  Lower than expected LOE was supported by further reduction of DJ Basin LOE which averaged less than $4 per BOE in the quarter.  GTP expenses were approximately $30 million lower than the second quarter of 2017 primarily as a result of the removal of Marcellus costs following the divestiture.  Income from equity method investees and other in the quarter totaled $53 million , benefitting from strong global methanol and liquid prices for Alba Plant volumes in EG, as well as higher than anticipated midstream income.

Adjustments to the third quarter loss attributable to Noble Energy primarily related to unrealized commodity derivative losses, debt extinguishment costs associated with the retirement of $1 billion in Senior Notes, and the write-off of costs associated with certain expiring leases in the Gulf of Mexico .

Approximately 78 percent of the Company's capital was utilized toward U.S. onshore plays and 20 percent was spent in Israel primarily for the Leviathan development.  Noble Energy ended the third quarter with $4.3 billion in total financial liquidity, comprised of cash and available credit facility capacity.

Outstanding Execution Driving Robust U.S. Onshore Cash Flow and Oil Volume Growth
Third quarter 2017 operating cash flow from the Company's DJ Basin , Eagle Ford , and Delaware Basin assets increased more than 40 percent as compared to the third quarter of last year.  Total sales volumes across the Company's U.S. onshore assets were 219 MBoe/d (42 percent oil, 25 percent NGL, and 33 percent natural gas), at the high end of original guidance.  Adjusting for the impact of localized rain storms in late September that affected Eagle Ford production, total onshore volumes would have been two percent above the high end of original guidance.  U.S. onshore oil volumes of 93 MBbl/d were a quarterly record for the Company and were higher by eight percent from the second quarter of 2017 and more than 25 percent from the quarter one year ago, pro-forma for the Marcellus divestment.

The DJ Basin averaged 112 MBoe/d, including quarterly record oil production of 61 MBbl/d (54 percent of total basin production).  Oil volumes in the DJ Basin were up more than six percent from the second quarter of 2017, driven by continued strong well performance in the Company's Wells Ranch and East Pony areas.  Production from the Eagle Ford averaged 76 MBoe/d, up 10 percent from the second quarter due to continued development of South Gates Ranch .  Delaware Basin production of 27 MBoe/d was up 17 percent from the second quarter, in line with expectations.  Other U.S. onshore assets contributed the remaining 4 MBoe/d.

In the DJ Basin , 32 wells commenced production during the quarter including 19 in Wells Ranch and 13 in East Pony.  The average lateral length of the wells was 9,170 feet, with Wells Ranch wells utilizing a proppant concentration of 1,800 pounds per lateral foot and East Pony wells utilizing 1,000 pounds per lateral foot.  The East Pony wells were essentially all located on federal acreage, which were permitted more than a year ago at lower concentrations. For the three development plan areas commencing production in Wells Ranch this year, 31 of 34 wells (10,000 foot average lateral length) have exceeded 1,000 Boe/d and each of the development plan areas is currently producing more than 10,000 Boe/d, gross.

Eight Lower Eagle Ford wells in South Gates Ranch began production during the third quarter of 2017, driving the production increase as compared to the second quarter.  In the northern part of Gates Ranch , a 4-well pad commenced production in the third quarter, including two Lower Eagle Ford wells and two Upper Eagle Ford wells in co-development.  The four wells averaged a 5,000 foot lateral length and each was completed with 2,500 pounds of proppant per lateral foot.  Early performance of the Upper Eagle Ford wells is consistent with expectation and significantly better than historical completion designs.

The Company initiated production on 14 operated wells during the third quarter in the Company's Delaware Basin acreage, including 12 Wolfcamp A wells, one Wolfcamp B well, and the Company's first 3rd Bone Spring well.  Nine of the wells commenced production during the month of September.

Four wells on the Monroe unit have been on production more than 60 days.  The wells include two Wolfcamp A Upper wells, one Wolfcamp A Lower, and one 3rd Bone Spring well.  The Wolfcamp A wells averaged 300 Boe/d per 1,000 lateral feet over the initial 30 days of production.  Of the three Wolfcamp A wells, two were 10,000 foot laterals, and they have exhibited longer plateaus and flatter declines as expected.  The 60-day production rate on the two long laterals has averaged more than 93 percent of the respective initial 30-day rate.  The 3rd Bone Spring well (10,000 foot lateral) averaged more than 2,300 Boe/d over the first 30 days and 2,100 Boe/d over 60 days of production.

The Company began production on its third operated well within the Wolfcamp B zone during the quarter.  The Cole Younger 30-23 well, with a 3,800 foot lateral, was completed using 3,000 pounds of proppant per lateral foot and produced 1,680 Boe/d (75 percent oil) over the first 30 days on production.

The first Delaware Basin central gathering facility, operated by Noble Midstream Partners , began operation at the end of July.  Ten wells were tied into production through the facility in the third quarter, including wells from three multi-well pads. Gross oil throughput capacity at the facility was expanded to 15 MBbl/d during the third quarter, and the facility was connected to the Advantage Pipeline (NBLX owns 50 percent) to Crane, TX.

The Company maintained an average of seven operated drilling rigs onshore during the third quarter (two in the DJ and five in the Delaware ).  During the quarter, the Company drilled 49 wells (32 DJ, 17 Delaware) and reduced its long lateral drilling times in both basins.  In the DJ Basin , the Wells Ranch AF07-631 well with a lateral length of 9,616 feet was drilled (spud to rig release) in 4 days, and in the Delaware , the Holy Mole 23-14 with a lateral length of 10,567 feet was drilled in 19 days.  The improvements of three percent and 18 percent from prior records, respectively, have benefitted from the Company's continued focus on physics-based training and application of drilling data analytics across all basins.

Record Quarterly Sales Volumes and Increased Reserves in Israel
Natural gas production in Israel averaged an all-time gross record of 997 million cubic feet of natural gas equivalent per day (MMcfe/d) during the third quarter of 2017, up slightly from the second quarter of 2017 and the third quarter of last year.  Net sales volumes totaled 285 MMcfe/d.  The increases were driven primarily by continued natural gas demand in power generation, despite planned maintenance at the Tamar field which was carried out in the latter part of September and early October.  During the third quarter, gross natural gas sales volumes exceeded one billion cubic feet of natural gas equivalent per day for 79 days.

Noble Energy recently increased the estimate of gross recoverable resources at Tamar to 11 trillion cubic feet equivalent of natural gas.  This increase of 10 percent reflects continued reservoir modeling and assessment of learnings from the Tamar-8 well drilled and completed earlier in the year.  Net booked reserves for the field were increased by approximately 285 billion cubic feet equivalent of natural gas.

Project development for Leviathan is more than 23 percent complete, with all critical path equipment and major contracts secured.  Construction of the production platform is underway and the project remains on budget and schedule with first gas by the end of 2019.

Continued Strong Cash Flows and Volumes from Other Offshore Assets
Sales volumes in the Gulf of Mexico were at the high end of expectations at 25 MBoe/d, with 83 percent oil contribution, reflecting continued strong field performance and facility uptime across the Company's position.  In July, the Gunflint field surpassed its one-year anniversary of first production.  Also during the third quarter, the Company exceeded more than one year of offshore performance without a recordable safety incident in either production operations or at the Company's operated facilities.

Sales volumes for West Africa were 63 MBoe/d (24 percent oil, 11 percent NGL, and 65 percent natural gas) which were less than produced volumes by 6 MBbl/d.  The difference in sales and produced volumes relates to the lifting schedule for the Alba field.  Better than anticipated production from the Alba field resulted from the conversion of two wells from natural gas injection to production wells during the third quarter.

Total sales volumes for the fourth quarter of 2017 have been reconfirmed at a range of 380 - 390 MBoe/d, showing the Company's asset resiliency despite the impact of early fourth quarter storms in the Gulf of Mexico and Eagle Ford areas.  U.S. Onshore volumes are anticipated 15 percent higher than the third quarter of 2017, with each commodity (crude oil, NGL, and natural gas) expected higher by double-digits.  U.S. Onshore oil volumes have been reconfirmed at a range of 102 to 108 MBbl/d.  The oil increase is primarily a result of the Company's Delaware Basin ramp in wells commencing production late in the third quarter and in the fourth quarter.

Offshore, expectations for volumes from Israel have been raised to reflect quicker-than-expected maintenance at the Tamar field and continued strong demand outlook.  This increase mostly offsets the change in expected Gulf of Mexico oil volumes which includes the impact of Hurricane Nate and adjustments to the lifting schedule in West Africa .

Capital expenditures and the majority of cost items have been maintained as previously expected.

Additional details for the third quarter results and updated fourth quarter guidance can be found in the quarterly supplement on the Company's website,

(1) A Non-GAAP measure, see attached Reconciliation Schedules

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