Current NBL Stock Info

Overall U.S. oil growth 40% from Q1 2017 to Q4 2017: Noble

Noble Energy (ticker: NBL) announced third quarter results today, showing a net loss of $136 million, or ($0.28) per share. After adjusting for special charges, Noble posted a loss of $10 million, or ($0.02) per share.

Noble produced 355 MBOEPD in Q3, which was 10 MBOEPD above the midpoint of original guidance. Pro-forma for the company’s Marcellus sale in the middle of the year, Q3 production is up 4% sequentially. This growth was accomplished despite the heavy storms in September, which forced the company to shut in an average of 5 MBOEPD of Eagle Ford production.

Noble’s operating cash flow from its onshore assets increased by more than 40% year-over-year. Onshore production was at the high end of guidance, and without the effects of the storms production would have been 2% above the high end of guidance. Growth is expected to continue in Q4, with current guidance predicting 15% higher sequential U.S. onshore volumes.

Noble Energy Finds New Measure of Oil Drilling Success: 1 Terabyte of Data per Rig Per Day is Pushing Noble’s U.S. Production up 15%

Source: Noble Investor Presentation

New on-location measuring stick: 1 terabyte of data per rig per day

In the Q3 analyst call, Noble provided some color on how it has achieved this growth. Gary Willingham, EVP of Operations, said “We’re applying advanced analytics on real time well data with roughly 30 data point collected every second on every rig. That’s roughly 1 TB of data per rig per day. With constant monitoring and analysis of the data streaming in from each rig, our drilling teams and geoscientists now have the ability to quickly identify what is happening downhole and rapidly execute any needed modifications to the program.

“In addition, we retrained our drilling teams both in the office and the field to use a physics-based approach to drilling rather than simply relying on empirical knowledge in the field. This new approach lets us take full advantage of the massive amount of data we are collecting, such as revolutions per minute, weight on bit, pump pressures, et cetera.

“We’re utilizing and continually improving algorithms that allow us to analyze performance relative to expectations and relative to prior wells. Our goal is to maximize the amount of energy generated by the rig that is actually being used to make new hole.

“The combination of these items along with our experience of drilling more than 2,000 horizontal wells in the US continues to drive significant drilling efficiencies.”

Leviathan on schedule

Noble is also making major moves in Israel, where the company operates the Tamar offshore gas project. The company had record sales volumes in Q3, averaging nearly 1 Bcf/d gross. In addition, Noble has added 1 Tcfe to its estimate of the project’s gross recoverable resources, bringing the total to 11 Tcfe gross.

Noble reports that it is making good progress on its Leviathan project, also targeting gas off the coast of Israel. Sanctioned in February, Phase 1 of Leviathan will consist of four wells, each capable of flowing more than 300 MMcf/d. In total, Phase 1 will cost about $3.75 billion, with Noble contributing $1.5 billion. The project is currently about 25% complete, and is on schedule for first gas in 2019.

Noble intends to fund Leviathan development by selling part of its interest in Tamar, with Chairman and CEO Dave Stover reporting “we’re on track to sell down an incremental 7.5% interest in Tamar over the next year.”

Noble Energy Finds New Measure of Oil Drilling Success: 1 Terabyte of Data per Rig Per Day is Pushing Noble’s U.S. Production up 15%

Source: Noble Investor Presentation

Q&A from today’s Q3 earnings call

Q: You had mentioned looking at opportunities for returning cash to shareholders. From what we’ve seen in industry that infers stock buybacks, dividends with some of the capital that you might be able to bring in with some asset monetization or free cash flow with from Leviathan in the future. Can you give us some frameworks or context, how you all think of that?

David L. Stover: I think that’s something and making sure we’re delivering the return to the shareholders has always been critical and important to us. Some of those considerations will, obviously, be on the table as we’re starting to generate more cash and start to create more room as we move forward here.

I’ll go back to what I laid out in my discussion, kind of our priorities are to continue to make sure we keep that strong balance sheet, focus on the return to shareholders, and look at that on a per share basis. So I think everything will be on the table there as we continue to create more visibility on the cash flow growth.

Q: So if I am interpreting again what you’re saying, it’s probably once Leviathan comes online is when some of those options will likely come onto the table?

David L. Stover: Well, I think you obviously start to create a lot more room when Leviathan comes online. I mean, if you look at just the cash flow impact of Leviathan from going from a spending level in 2019 to a – if you fill up full capacity in 2020, that’s about $1 billion change switch just over that year. So that creates a lot of capacity.

What I’d like to do is create more capacity in the near term also with some of the proceed acceleration that – that’s not really even so much about how much proceeds are you generating but keeping the business focused on what we need to focus on to build our value going forward. So Leviathan, when it comes on, obviously, we can create some more room in the near term, that’s even better.

Q: On the Niobrara, you had mentioned in the release that you’d had to use a lower proppant intensity than you wanted to. I want to see if are you going to be able to go to the 1,800-pound level here in the fourth quarter? Or what does that look like going forward? And is 1,800 pounds kind of your optimum for the East Pony and Wells Ranch area?

Gary W. Willingham: Yeah. 1,800 pounds is still our base design for DJ. We’ve tested designs, obviously, larger and smaller than that. We’ll continue to test designs that are different than 1,800 pounds. But that is the base design. That’s what most of the wells are going to be completed on where we can. The East Pony wells, as you mentioned, were permitted quite some time ago. They’re on federal acreage and they were permitted at lower concentration levels. We made the decision that based on the length of time that it would take to go back and re-permit those with the federal government, we decided to go ahead and stick with the designs that we had. That was the best value decision, and those wells are performing nicely.

I think when you look forward at fourth quarter, we’ve got 20-plus wells coming on in the DJ. Roughly half of those are in Wells Ranch and half of those are in East Pony. Most of those East Pony wells are still going to be those lower concentration wells on federal acreage in the fourth quarter.

I think next year, we’ll still work through the budget, right, and figure out where activity is going to go. We’ve talked about taking some rigs to the Mustang and doing some drilling down there. That will be a larger part of the program next year. So we’ll see as we start talking through the budget and sharing that with you guys how much activity we end up with in East Pony. But certainly, our intention over time would be to bring the completion designs and the permits back in-line with what we think the best base design is going forward.

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